ASX-listed Prairie Lithium has reached a binding definitive agreement with Hydro Lithium, whereby Hydro Lithium will purchase 100% of the Phase 1 production from Prairie Lithium’s project.

Phase 1 comprises 150 t/y of lithium carbonate equivalent (LCE) and represents Prairie’s initial commercial scale proof-of-concept operation.

Under the agreement, Hydro Lithium will purchase the full Phase 1 output and will also provide and operate about A$10-million of Hydro Lithium’s proprietary refining equipment as part of the Phase 1 processing flowsheet.

In a media release, Prairie describes the agreement as an important step in derisking the Prairie lithium project, in Saskatchewan, Canada, as it secures a binding offtake partner for Phase 1 production while also bringing strategic equipment and technical capability to the project.

For shareholders, the company says this provides both external validation of Prairie’s development strategy and a clearer pathway toward first commercial sales.

The product pricing mechanism is linked to battery-grade carbonate pricing and is based on lithium weight percentage, conversion cost, and conversion efficiency.

Hydro Lithium operates an existing battery-grade refinery in South Korea which has a nameplate capacity of 3 600 t/y of LCE.

This provides Prairie with an established downstream processing route for Phase 1 production and aligns with the company’s strategy of selling an upgraded intermediate lithium product rather than undertaking the full battery-grade conversion.

Prairie says construction at the Phase 1 facility in Saskatchewan is well underway.

Production and disposal wells have been drilled, power infrastructure has been installed, and the building to house the direct lithium extraction equipment is nearing completion.

Under the agreement, following the start of Phase 1 production, Prairie and Hydro Lithium intend to work together and use best efforts to substantially expand supply under the agreement, as Prairie scales production.

The terms and conditions relating to supply, payment and production under the agreement are on commercial terms.

The agreement is for an initial ten-year term and may be renewed by mutual agreement for further terms of ten years up to a total term of 30 years.

The agreement includes standard clauses relating to force majeure events, supplier warranties including specifications and confidentiality and ownership of intellectual property rights.

“This is a monumental agreement for Prairie Lithium, as we now capture the entire value chain from resource to battery grade production. Hydro Lithium is an incredible project partner for us, with existing operations and battery-grade lithium production,” says Prairie Lithium MD Paul Lloyd.

Lloyd affirms that this provides the company a clear path in which it will establish and grow revenues and be one of the first lithium brine producers in North America bringing new lithium to market.

“Beyond the commercial benefits, we are incredibly excited by the level of support and enthusiasm shown by both the Canadian and South Korean governments for this collaboration.

“This partnership represents a significant bridge between our two nations in the global critical minerals supply chain.

“By combining Saskatchewan’s world-class resources with South Korea's leading processing technology, we are delivering exactly the kind of international cooperation required to power the energy transition,” he states.

“We are very excited to sign the strategic collaboration agreement with Prairie Lithium. Prairie Lithium is one of the most advanced lithium brine projects in North America and is the leading Canadian lithium brine project,” adds Hydro Lithium CEO Dr Uong Chon.

“Saskatchewan has very high-quality lithium brine resources, and we look forward to sourcing our lithium from Saskatchewan.

“Our strategic collaboration will represent a significant investment by Hydro Lithium in the Prairie Lithium project in Saskatchewan. We will be committing about $10-million towards our collaboration in the form of advanced lithium refining equipment and expertise.”