Australia-based lithium development company Green Technology Metals (GT1) has signed an offtake term sheet with LG Energy Solution (LGES) for its Seymour lithium project located in Ontario, Canada.

Besides, the South Korean battery manufacturing firm has agreed to make an equity investment of A$20m ($13.3m) in Green Technology Metals at A$0.92 ($0.6) per share.

Through the investment, LGES will subscribe to nearly 21.7 million new shares of the lithium development company.

Under the offtake agreement, LGES will purchase 25% of Green Technology Metals’ spodumene concentrate production from the Seymour lithium project for a period of five years from the start of commercial production.

Furthermore, Green Technology Metals will supply the equivalent lithia content to LGES in the form of lithium hydroxide should the former develop a lithium hydroxide conversion facility during the period.

LGES chief procurement officer Myung Hwan Kim said: “We have always been committed to expanding our supply chain in North America, as a steady supply of critical minerals, including lithium, is key to ensuring reliable and timely delivery of our innovative power solutions to our customers.

“Thanks to partnerships with competent local suppliers like GT1, we will continue our devotion to expediting the EV transition in North America, through our product competitiveness and operational excellence.”

Located near the township of Armstrong, the Seymour lithium project is currently in the exploration phase.

Commencement of commercial production at the project is subject to further indigenous and community consultation, attainment of project finance, and completion of technical and engineering studies.

Both companies expect to enter into a full form offtake agreement consistent with the terms outlined in the offtake term sheet by the end of August 2023.

Green Technology Metals chairman John Young said: “We welcome the execution of these important agreements with LGES and look forward to their contribution as a new strategic partner with GT1, alongside AMCI, Lithium Americas and Primero.

“LGES brings global scale and expertise in battery manufacturing as well as balance sheet strength as GT1 advances its integrated lithium strategy in the Tier 1 jurisdiction of Ontario.”