Alliance and Jiangte will share equally in the margin from the sales of lithium hydroxide after recovering respective costs of spodumene production and conversion costs, with the specific terms of cost recovery to be formalised in the JV agreement - targeted to be the current quarter.
Jiangte will continue to own and operate its lithium hydroxide and lithium carbonate converter in Yichun, Jiangxi Province, China (Converter) following its completion, with Alliance not required to fund any of the capital cost of the converter.
Concentrate requirements of the joint venture for 2019 and 2020 are initially expected to represent 20% of Bald Hill production, with the mining and spodumene concentrate operation south of Kalgoorlie flagged to reach annual production of 240,000t next year.
However, once fully operational, the converter will process approximately 100,000t of spodumene per annum, capable of producing up to 15,000tpa of lithium hydroxide.
Alliance's move to become involved in the production of battery grade concentrate reflects a broader trend in the sector.
Meanwhile, the spodumene concentrate producer said it would continue offtake negotiations with third-parties for the remaining, unallocated Bald Hill output of up to 80,000tpa in 2019 and up to 90,000tpa in 2020.
Shares in Alliance were up 9% to A17.5c in early trade, capitalising the company at $237 million.