PLS Group has locked in a two-year offtake agreement with Canmax Technologies for 150,000 tonnes per annum of spodumene concentrate, backed by a $100 million interest-free prepayment and a price floor to protect against market dips.
- Two-year binding offtake for 150,000 tonnes per annum with option to extend
- Price floor set at US$1,000 per tonne with unlimited upside exposure
- US$100 million unsecured, interest-free prepayment to enhance liquidity
- Supply to commence in 2026 from Pilgangoora Operation
- Agreement strengthens PLS’s operational flexibility and customer base
Strategic Offtake Agreement with Canmax
PLS Group Limited (ASX, PLS) has announced a significant milestone with the execution of a multi-year offtake agreement with Canmax Technologies Co. Ltd, a leading lithium-ion battery materials manufacturer listed on the Shenzhen Stock Exchange. The deal commits PLS to supply 150,000 tonnes of spodumene concentrate annually over two years, starting in 2026, with an option to extend for an additional year.
This agreement not only secures a steady revenue stream for PLS but also includes a price floor of US$1,000 per tonne, offering downside protection amid the notoriously volatile lithium market. Importantly, the pricing mechanism preserves full exposure to any price upside, allowing PLS to benefit from favourable market movements.
Liquidity Boost and Operational Flexibility
One of the standout features of this deal is the US$100 million unsecured, interest-free prepayment from Canmax. This substantial upfront payment will be repaid through offsets against spodumene concentrate sales under the agreement, providing PLS with enhanced near-term liquidity without the burden of interest or restrictive covenants.
PLS retains the flexibility to supply the contracted volumes from its Pilgangoora Operation, including either or both of its Pilgan and Ngungaju plants. This flexibility allows PLS to adapt production and sales strategies in response to evolving market conditions, ensuring disciplined operational management.
Strengthening Market Position and Partnerships
The agreement deepens PLS’s relationship with Canmax, reinforcing its position as a reliable, large-scale supplier in the global lithium materials market. Canmax’s confidence, demonstrated through the sizeable prepayment and price floor, underscores the quality and consistency of PLS’s spodumene product.
PLS’s Managing Director and CEO, Dale Henderson, highlighted that this deal not only secures financial stability but also supports the company’s strategic goal of diversifying its customer base and maintaining operational agility as lithium market fundamentals continue to improve.
With lithium demand expected to remain robust amid the global energy transition, this agreement positions PLS advantageously to capitalise on market opportunities while mitigating downside risks.
Bottom Line?
PLS’s new offtake deal with Canmax delivers financial security and market agility as lithium demand surges.
Questions in the middle?
- How will lithium market prices evolve relative to the US$1,000 per tonne floor?
- What are the risks associated with the unsecured nature of the $100 million prepayment?
- Will PLS exercise the option to extend the agreement beyond two years?