Azure Minerals (ASX:AZS) reports global lithium company Sociedad Química y Minera de Chile, via its wholly owned subsidiary SQM Australia, will make a major cornerstone investment to acquire a 19.99% interest in Azure.
SQM will invest up to $20 million to through a two-stage transaction, which Azure says is a strong endorsement of the lithium potential of the Andover Project (60% Azure / 40% Creasy Group) and highlights the upside potential for Andover to grow into a globally significant lithium mining and processing operation.
In the first tranche of the transaction, SQM subscribed for just over 16.38 million ordinary Azure shares at $0.2564 per share, raising $4.2 million for Azure.
Completion of the second tranche is subject to the satisfaction of a number of conditions precedent. These include:
- SQM having notified Azure that it has completed and is satisfied with its due diligence investigations into Azure; and
- SQM and Azure having entered into an offtake agreement under which SQM is entitled to an offtake right in respect of 25% of all lithium product in which Azure has an interest on arm’s length and commercially competitive terms.
The conditions precedent must be satisfied within 2 months from the date of completion of the first tranche.
On completion of the second tranche, SQM will subscribe for an additional 61.626 million ordinary shares at $0.2564 per share, raising a further $15.8 million for Azure.
Commenting on SQM’s investment, Azure Managing Director Tony Rovira says: “We’re very pleased to welcome SQM as a substantial and strategic investor in Azure, which demonstrates their strong interest and belief in the lithium potential of the Andover Project.
“THIS IS A SIGNIFICANT MILESTONE EVENT AND IS A STRONG ENDORSEMENT OF AZURE AND OUR PROJECTS BY ONE OF THE WORLD’S LEADING LITHIUM PRODUCERS”
This is a significant milestone event and is a strong endorsement of Azure and our projects by one of the world’s leading lithium producers.
The new relationship will allow Azure to draw upon SQM’s technical expertise in pegmatite hosted lithium exploration, project development, production and marketing, providing Azure with strong support as we look to develop the Andover lithium assets.
Azure is now in a very strong financial position and, following completion of both tranches of the transaction with SQM, Azure will have a cash balance of more than $25 million which will be used to accelerate lithium exploration through a program of intensive drilling across the Andover Project.”
In Australia, the 20% rule stipulates a person or entity cannot normally acquire 20% or more of a company without making a formal takeover bid. Under the “creep” provisions, a shareholder can raise their stake above the 20% threshold by buying up to 3% of the company every 6 months.
The Andover Project is located in the West Pilbara region of WA and gives Azure and its shareholders strong exposure to the vital, high-value metals of nickel (Ni), copper (Cu), cobalt (Co) and lithium (Li) necessary for the transition to industry decarbonisation, electrification and battery storage.
Azure has already discovered two Ni-Cu-Co deposits at Andover and released a maiden mineral resource (MRE) for the Andover Deposit of 4.6Mt @ 1.11% Ni, 0.47% Cu and 0.05% Co (1.41% NiEq), containing 51,700t of Ni, 21,700t of Cu and 2,290t of Co.
A second MRE for the Ridgeline deposit is due in Q1 2023.
SQM is a global mining and chemical company with operations in Chile and Western Australia and has exposure to the lithium, potassium nitrate, iodine, and thermo-solar salts markets.
The company is one of the world’s largest lithium producers. In Western Australia, SQM and Wesfarmers (ASX:WES) are joint venture partners in the Mt Holland lithium project, which will be a fully integrated operation producing battery-quality lithium hydroxide.
Images: Azure Minerals Ltd