Tesla will also work with the SA company on its Stage 3 expansion that will allow it to develop downstream lithium chemical processing in Australia and incorporate it directly into Tesla’s supply chain.

Core Lithium’s share price jumped more than 15 per cent to 95 cents following yesterday’s announcement.

The company announced its final investment decision on its Finniss lithium project in September with construction near Darwin now well underway and the production of the first lithium concentrate before the end of this year.

The legally binding term sheet with Tesla is for the supply of up to 110,000 tonnes of Li2O spodumene concentrate from the Finniss Lithium Project over a four-year term, with pricing referenced to the market price for spodumene concentrate.

Prior to the Tesla announcement, approximately 80 per cent of Finniss’ initial output was covered under four-year offtake agreements with Ganfeng, one of the world’s largest lithium producers by production capacity, and Yahua, a key lithium supplier to Tesla.

Core Lithium Managing Director Stephen Biggins said subject to execution of a definitive agreement, Core’s supply to Tesla is scheduled to start in 2023 and will last  four years from supply commencement or until 110,000 dry metric tonnes had been delivered.

“This adds to the previously announced binding offtake agreements with existing customers over four years,” he said in a statement to shareholders yesterday.

“Core Lithium is thrilled to have reached this agreement with Tesla and look forward to further growing this relationship in the years to come.

“Tesla is a world-leader in electric vehicles and its investment in offtake and interest in our expansion plans for downstream processing are very encouraging.”

Core Lithium enjoyed a 321 per cent surge in its share price last year from 15 cents to 59 cents after committing to building the lithium mine and processing plant in the Northern Territory.

The company also announced in December a move to a new head office in Adelaide’s Flinders Street from King William Street to cater for its growing workforce.

“The transition to a larger corporate premises is both a reflection of the strong and consistent growth we have experienced as a business over the past 18 months, and a foreshadowing of the space and larger corporate workforce we will be requiring as we evolve from an exploration company to a fully-fledged lithium miner,” Biggins said in December.

The Finniss project is about 25km from the port of Darwin, is the first lithium mine in the Northern Territory and the first new significant Australian lithium mine in more than a decade.

A decision on Stage 2 of the project, an expansion of its concentrate production, is expected this year. A feasibility study into Stage 3, which would enable Core to begin downstream lithium hydroxide production in the Northern Territory, is underway.

A decision on Stage 3 is expected next year following a search for partners and finance ahead of potential construction in 2024.

Core Lithium was presented with the Rising Star Award at InDaily’s 2021 South Australia’s Business Index after jumping 70 places in the index to No.16 from 86 in 2020.

The company now has a market capitalisation of about $1.5 billion.