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Stardust Power Inc. (NASDAQ:SDST), a company specializing in nonferrous metal production currently valued at $48 million, has announced a preliminary agreement with Sumitomo Corporation of Americas for a significant lithium carbonate supply deal.
According to InvestingPro analysis, the company holds more cash than debt on its balance sheet, though it’s currently trading near its 52-week low of $0.98. On Monday, Stardust Power disclosed the non-binding letter agreement, which outlines a prospective 10-year offtake arrangement, with an option to extend for an additional five years.
Under the terms of the proposed deal, Sumitomo would commit to purchasing 20,000 metric tons of lithium carbonate annually from Stardust Power’s inaugural production line. The quantity could increase to 25,000 metric tons based on a mutual decision. The agreement’s initiation is contingent on the first qualification of Stardust Power’s lithium carbonate for sale to any of Sumitomo’s clients.
The pricing structure will be tied to the spot market rates as published by Fastmarkets or another mutually recognized price reporting agency. Both parties have expressed willingness to adjust prices in the future to suit specific customer requirements.
Moreover, the arrangement includes joint marketing initiatives for the lithium carbonate, with Sumitomo agreeing to undertake a minimum level of marketing activities, the specifics of which will be determined in the final agreement.
Prior to Stardust Power producing battery-grade lithium that meets end-user specifications, Sumitomo has agreed to buy technical grade lithium products. The purchase volumes will either match Stardust Power’s production or adhere to the annual agreed quantities, with prices reflective of the current spot market.
The completion of this transaction hinges on the successful negotiation and execution of a definitive agreement. The companies have agreed to establish a negotiation schedule with milestones and deadlines for essential deliverables.
This announcement is based on a 8-K statement and marks a significant step for Stardust Power as it advances towards securing a long-term commercial partnership with a major industry player in Sumitomo.
While the stock has experienced significant volatility, falling over 90% in the past six months, InvestingPro subscribers have access to 15 additional exclusive insights about the company’s financial position and market performance. The definitive terms of the agreement will be finalized through ongoing negotiations between the two companies.
In other recent news, Stardust Power Inc. has made significant strides in its lithium project and corporate restructuring. The company announced a public offering expected to generate approximately $5.75 million in gross proceeds. The funds will be allocated towards working capital, general corporate purposes, and to settle certain promissory notes. In addition, Stardust Power has secured a site for its lithium refinery in Oklahoma, marking a significant step towards construction.
Both Roth/MKM and B.Riley have given positive evaluations of Stardust Power’s earnings and revenue, issuing a Buy rating for the company. Furthermore, Stardust Power has entered into a $4.7 million engineering agreement with Primero USA, Inc. for the development of its Muskogee Lithium facility, expected to be completed in the first half of 2025.
The company has also initiated significant corporate restructuring, transitioning from WithumSmith+Brown, PC, to KNAV CPA LLP as its independent registered public accounting firm. Additionally, Stardust has appointed Paramita Das as its new Chief Strategy Officer and Senior Advisor. These recent developments reflect the company’s commitment to reshoring lithium processing and production to enhance U.S. energy independence and sustainability in the lithium supply chain.
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