Lithium company Sociedad Química y Minera de Chile is set to acquire a 19.99% interest in Azure Minerals by investing up to A$20m ($13.8m), through the former’s wholly owned subsidiary SQM Australia.
Under the two-stage transaction, SQM initially subscribed for 16,381,720 ordinary shares of Azure at A$0.2564 apiece, allowing Azure to raise A$4.2m. The second tranche is subject to certain conditions, including the completion of due diligence investigations, and Azure signing an offtake agreement SQM.
According to the offtake agreement, SQM is permitted to offtake 25% of all lithium products owned by Azure. The strategic investment by SQM will support the lithium mining and processing operation at its majority-owned Andover project, said Azure.
Following the completion of the second tranche, SQM will subscribe for an additional 61,626,471 shares in Azure, each priced at A$0.2564. This will allow Azure to raise A$15.8m. Azure managing director Tony Rovira said: “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.”
Upon completion of both tranches, SQM will become Azure’s largest shareholder. SQM will also hold the right to appoint a director to Azure’s board of directors. It will also have the right to form a technical committee to advise on the exploration.
Azure will use the deal proceeds to fast-track lithium exploration on its 60%-owned Andover Project in the West Pilbara region of Western Australia.
Rovira added: “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 $25m, which will be used to accelerate lithium exploration through a programme of intensive drilling across the Andover Project.”