LONDON (Alliance News) - Rare Earth Minerals PLC and Bacanora Minerals Ltd on Friday said their Sonora lithium project in Northern Mexico has signed a lithium supply deal with Tesla Motors, the US-based electric sports car and energy storage products company.

On condition that the Sonora project reaches certain performance milestones in the next two years, Tesla will buy lithium hydroxide to feed the manufacturing of batteries at its Gigafactory in Nevada. One of the conditions will be that the Sonora project can supply lithium hydroxide in accordance with volumes and timeframes which Tesla will determine.

The supply deal is for an initial five years, starting from when Tesla makes its first order, with an option for this to be extended by another five years.

"The selection of the Sonora lithium project as one of the lithium suppliers to the Tesla Gigafactory is a landmark transaction that will support the development and commercialisation of the Sonora lithium project. This key supply agreement with Tesla will hopefully be the first of a number of potential lithium off-take partners for the Sonora lithium project as we move towards the next stages of project development," said Rare Earth Chairman David Lenigas.

By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance

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