Prairie Lithium (ASX:PL9) Secures Long Term Offtake Framework to Enable Scaled Growth with Hydro Lithium

Prairie Lithium has advanced its commercial strategy with the execution of an offtake heads of agreement with Hydro Lithium, a battery grade lithium producer operating in South Korea.

The arrangement provides a clear structure for the sale of lithium bearing crystallite from the Company’s Phase 1 commercial scale proof of concept plant, which is designed to deliver approximately 150 tpa LCE.

By supplying an intermediate product instead of constructing its own conversion facility, Prairie Lithium positions itself to enter the market in a capital efficient and operationally simplified manner, leveraging downstream infrastructure that already exists and is configured to process crystallite feedstock.

Managing Director Paul Lloyd addresses key investor questions below, outlining how the agreement provides both immediate commercial certainty and substantial longer term optionality.

The agreement establishes a complete and long term sales route for 100% of Phase 1 crystallite production, which is designed to total approximately 150 tpa LCE.

Hydro Lithium will purchase all production under a ten year commitment, enabling Prairie Lithium to bring its product to market without building its own battery grade processing capability.

This structure mirrors conventional concentrate sales models used widely across the lithium sector, allowing the Company to generate early revenue while maintaining a low capital footprint.

Through Hydro Lithium’s established refining network in South Korea, Prairie Lithium secures an immediate downstream pathway that supports predictable offtake and operational focus during early production.

While Phase 1 production is expected to be 150 tpa LCE, the heads of agreement includes a provision under which both parties will use best endeavours to scale crystallite supply to levels capable of supporting up to 10,000 tpa LCE at Hydro Lithium’s refinery.

This mechanism creates a scalable and forward looking commercial framework, reflecting strong downstream interest in larger future volumes.

It enables Prairie Lithium to contemplate expansion of its production base under a consistent pricing structure and with an established customer, avoiding the complexity of securing new offtake partners as production grows.

In doing so, the agreement provides a long horizon of commercial continuity, aligning closely with the Company’s multi stage development potential.

How is the lithium bearing crystallite priced under the agreement and what does this mean for market exposure?

Pricing is determined by a formula linked to battery grade lithium carbonate, incorporating lithium weight percentage, conversion cost and conversion efficiency.

This ensures close alignment with recognised global pricing benchmarks, while accurately reflecting the characteristics of an intermediate crystallite product.

The formula is designed to allow both parties to maintain attractive margins under current conditions and to participate in upside pricing movements in the lithium market.

By selling crystallite instead of refined battery grade material, Prairie Lithium retains market linked exposure without incurring the high capital intensity associated with constructing and operating a conversion facility.

Hydro Lithium operates a commercial battery grade refinery and demonstration plant in South Korea, using proprietary CULX technology to convert crystallite and brine feedstocks into high purity lithium carbonate and lithium hydroxide.

The existence of this infrastructure provides Prairie Lithium with immediate downstream processing capability, eliminating the need to develop its own refining facilities at this stage.

Hydro Lithium’s technology platform is designed to improve recoveries, reduce reagent consumption and deliver consistent product specifications, complementing Prairie Lithium’s strategy of maintaining a capital efficient operational profile while scaling in a disciplined manner.

Under the agreement, Prairie Lithium must construct, commission and operate its Saskatchewan based proof of concept plant and use best endeavours to produce crystallite up to its 150 tpa LCE nameplate capacity.

Both companies have committed to negotiate a definitive agreement in good faith.

The heads of agreement will remain effective until 31 December 2026, unless terminated earlier or superseded by a definitive agreement.

This provides a clear and predictable timeline for finalising binding terms, ensuring a stable commercial environment as Phase 1 moves toward commissioning and first production.

The heads of agreement with Hydro Lithium delivers a fully defined, long term commercial pathway for Prairie Lithium’s initial production, while also establishing a scalable structure capable of supporting future increases to up to 10,000 tpa LCE.

By pairing 100% offtake certainty with a pricing mechanism linked to global benchmarks, the agreement balances near term revenue reliability with substantial long term optionality.

Together with a clear timeline for advancing to a definitive agreement, Prairie Lithium is well positioned to progress construction and commissioning with confidence, integrating into a downstream network that already possesses the technology and processing capacity required to refine its intermediate crystallite product.

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