Why Latin Resources is Commencing Offtake Process for the Salinas Lithium Project?

Latin Resources Limited (ASX: LRS), a mining company, has recently received numerous inquiries from key players in the battery manufacturing, chemical converting, Original Equipment Manufacturers (OEMs), and trading industries regarding its Salinas Lithium Project in Minas Gerais, Brazil. In response to this interest, Latin Resources has decided to initiate an offtake partnering process to assess proposals and explore project financing opportunities for the Salinas Project. The goal of this process is to de-risk the development, funding, and operations of Salinas, with the aim of maximising value for Latin shareholders.

What is the Salinas Lithium Project?

The Salinas Lithium Project, wholly owned by Latin Resources, is located in Minas Gerais, Brazil. The project has recently undergone a Preliminary Economic Assessment (PEA) which indicates that it can be operated with low capital investment in two phases. It is expected to produce high-quality 5. 5% Li2O spodumene concentrate (SC5.

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5) and 3% Li2O fine spodumene concentrate (SC3). Over an initial 11-year mine life, the combined average production for Phase 1 and Phase 2 is projected to be approximately 405,000 tonnes per annum (tpa) of SC5. 5 and 123,000 tpa of SC3. The estimated capital expenditure for Phase 1 is US$253 million, with first production slated for 2026. Phase 2, which is expected to be fully funded by Phase 1 production, will require an additional US$55 million in capital.

What is the Offtake Process?

As part of the offtake partnering process, Latin Resources is seeking funding proposals from potential offtake partners. In exchange for their offtake commitments, these partners will provide funding to support the development of the Salinas project. Latin's objectives in this process are to secure competitive offtake terms, find a well-credentialed partner that can add value to Salinas and mitigate development risks, and attract attractive funding support.

Who is Assisting Latin Resources in the Offtake Process?

Macquarie Capital Australia Limited has been appointed as the financial adviser to support Latin Resources in structuring and securing offtake agreements and potential project funding from selected partners for the Salinas Lithium Project. Macquarie Capital has extensive experience and strong relationships in the critical minerals space, particularly in the lithium sector and battery supply chain. They will play a crucial role in advising Latin Resources on securing offtake agreements and funding.

Latin Resources' Managing Director, Chris Gale, expressed his satisfaction with the commencement of the formal offtake partnering process. He highlighted that the PEA results have defined a promising production profile for the Salinas project, making it an opportune time to consider offtake partnerships and potential funding to minimise development and funding risks. The involvement of Macquarie Capital adds expertise and credibility to the process, bringing Latin Resources closer to their goal of bringing the Salinas Lithium Project into production by 2026.

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