Chilean Cobalt (OTCQB: COBA) announced Monday it has entered into a letter of intent (LOI) with a subsidiary of Glencore (LSE: GLEN) regarding an offtake agreement for its La Cobaltera project located in the San Juan district of northern Chile.

Under the agreement, Chilean Cobalt (which calls itself “C3”) will supply Glencore with 100% of the cobalt and copper production from La Cobaltera for an initial period of five years. The sales price will be based on an agreed-upon pricing formula linked to future prevailing market prices.

C3 and Glencore anticipate that the majority or full spectrum of the copper and cobalt intermediate products will be shipped into the US and/or US Free Trade Agreement (FTA) countries. The former is based in Berwyn, Pennsylvania.

This arrangement, C3 says, is in line with ongoing discussions with certain third parties regarding its strategy to establish an Americas-centric cobalt supply chain and works to satisfy its own conditions precedent regarding a potential project financing.

Last month, the company received a LOI from the Export-Import Bank of the United States for a potential funding package of up to $317.4 million, which will be used to fund the development of C3’s mining concessions that comprise the La Cobaltera project.

Through the offtake agreement, C3 is expected to be able to leverage Glencore’s own capabilities and global network as one of the world’s leading industrial producers and marketers of cobalt. Glencore currently has extraction and processing operations in the Democratic Republic of the Congo, Australia, Canada and Norway — and a growing cobalt recycling presence in the US.

In addition, the Swiss commodity trading giant is also expected to provide strategic support to advance the first phase of the La Cobaltera project, and collaborate with C3 on greenfield solutions for domestic US processing and refining into battery materials and/or metal products.

C3 is currently working on restarting the past-producing mines that comprise the La Cobaltera project. Its development will take two stages, with the first stage focused on near-term production potential of resources around the historic open pits. The second stage will focus on the deeper sulphide mineralization.

Source: MINING.COM