Azure Minerals attracts $20m lithium investment from SQM Australia
The Australian subsidiary of global lithium company SQM is acquiring a 19.99% stake in Azure under a two-stage deal.
Global lithium company Sociedad Química y Minera de Chile SA will invest up to $20 million to acquire a 19.99% interest in Azure Minerals (ASX: AZS) through a two-stage transaction.
The cornerstone deal will be conducted via Sociedad’s wholly-owned subsidiary SQM Australia and is focused on the lithium potential of the Andover project in Western Australia’s Pilbara region, held in a joint venture between Azure (60% equity) and Creasy Group (40%).
SQM has made an initial $4.2 million investment in Azure by subscribing for 16.4 million shares at $0.2564 each, representing a premium of 13.9% to Azure’s last traded price of $0.225 per share on 6 January.
The second stage of the transaction will see SQM subscribe for an additional 61.6 million shares at the same price to raise $15.8 million.
Second stage subject to offtake agreement
Completion of the second stage will be subject to certain conditions including the signing of an offtake agreement which will give SQM entitlement to 25% of all lithium product in which Azure has an interest, on independent and commercially competitive terms.
If the conditions are not satisfied within two months of the first stage investment, either party may terminate their residual obligations to proceed with the second stage.
Following completion of both stages of the transaction, SQM will become Azure’s largest shareholder with 19.99% of its issued capital.
The investment will give Azure 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.
Globally-significant operation
Azure managing director Tony Rovira said SQM’s interest highlights the potential for Andover to grow into a globally-significant lithium mining and processing operation.
“Having one of the world’s leading lithium producers as a substantial and strategic investor is a strong endorsement of our project,” he said.
“It will allow us to draw on SQM’s technical expertise in pegmatite-hosted lithium exploration, project development, production and marketing, and provide us with strong support as we look to develop the Andover lithium assets.”
Strong exposure
The Andover project offers strong exposure to high-value metals such as nickel, copper, cobalt and lithium which are necessary for the transition to industry decarbonisation, electrification and battery storage.
In March, Azure released a maiden mineral resource for the Andover deposit of 4.6 million tonnes at 1.11% nickel, 0.47% copper and 0.05% cobalt (1.41% nickel equivalent), containing 51,700 tonnes of nickel, 21,700t copper and 2,290t cobalt.
A resource estimate for the nearby Ridgeline deposit is due in the first quarter of this year.
In October, Azure identified abundant spodumene-rich, lithium-bearing pegmatites within a 4-kilometre-wide corridor at Andover.
Surface rock chip sampling confirmed high grades of lithium in outcropping pegmatites, with lithium oxide grades of 3.32%, 2.65% and 1.62%.
Growth strategy
Mr Rovira said the company had recently embarked on an accelerated growth strategy to advance Andover’s multi-commodity opportunity.
“Our lithium exploration will be fast-tracked with a maiden lithium-focused drilling program expected to commence soon,” he said.
“Nickel exploration and mine development studies on the Andover and Ridgeline deposits will also continue throughout the year.”