Zenith Minerals (ASX: ZNC) is teaming up with Saudi Arabia’s EV Metals Group (EVM) with plans to explore for lithium from its Western Australian projects, as EVM commits to building a new battery chemical complex in the Middle Eastern kingdom.
Under the deal, Zenith and EVM will focus initially on exploring for lithium at Zenith’s Split Rocks and Waratah Well projects in Western Australia.
As part of this, EVM will spend a minimum of $7 million on exploring Split Rocks or Waratah Well in 24 months. The $7 million expenditure can include any new projects that have been mutually decided upon.
Split Rocks is located south of Southern Cross and Waratah Well is east of Geraldton in WA.
EVM will subscribe for 20 million Zenith shares at $0.30 per share, slightly above the last trade in the stock before it was suspended last Friday at $0.29, but representing a premium of 20% on the preceding 10 business days.
The $6 million raised will be used to find additional lithium opportunities as well as near-term advancement of its gold and base metals projects.
EVM is at present completing front-end engineering and design of its first production trains for 50,000 tonnes per annum of lithium hydroxide, which will require 330,000tpa of spodumene concentrate at a grade of 6% lithium oxide.
As part of its new lithium focus, Zenith’s base metal and gold assets will be demerged into one or more companies, which will then be listed on the ASX.
Partners will assess new EV metals opportunities in Australia
Zenith chief executive officer Michael Clifford said the deal will unlock the lithium potential of Split Rocks and Waratah Well.
But the new joint venture goes “much deeper”: the two parties have agreed to jointly assess new opportunities here for other metal needed for electric vehicles.
“The arrangement puts Zenith in a unique position to build a significant lithium business in conjunction with EVM,” Mr Clifford said.
Zenith is free carried to lithium production, retaining a 40% share of each project.
EVM focused on becoming global battery metals player
EVM is seeking to be a global leader in battery chemicals and technology by producing high purity chemicals and cathode active materials needed for rechargeable lithium-ion batteries in electric vehicles and renewable energy storage.
The company said its integrated battery chemicals complex, to be located in Yanbu Industrial City in Saudi Arabia, will be the world’s first such operation.