On September 9, Andrada Mining Limited (AIM: ATM; OTCQB: ATMTF) announced a collaboration with Chilean lithium giant SQM to jointly develop lithium resources in Namibia. Andrada Mining holds mining and exploration assets in Namibia, including lithium, tin, and tantalum. Its wholly-owned subsidiary, Uis Tin Mining Company Limited (UTMC), holds a mining license for the Lithium Ridge area near the Uis tin mine, covering 3,300 hectares.
The mining license for Lithium Ridge area is currently held by Grace Simba Investments (GSI), a subsidiary of UTMC under Andrada Mining. SQM Australia (Pty) Ltd. plans to acquire a 50% stake in GSI through a phased investment.
SQM will pay Andrada $2 million (US) in participation fees, with $500,000 paid upon signing the agreement and the remaining $1.5 million contingent on meeting certain conditions.
Then SQM’s investment will occur in three stages to secure a 50% stake in GSI:
- Phase 1: Over the first 18 months, SQM will invest $7 million (US) to acquire 30% stake of GSI.
- Phase 2: In the subsequent 24 months after Phase 1, SQM will invest an additional $13 million (US) in exploration to increase its stake to 40% by acquiring an additional 10% of GSI.
- Phase 3: SQM may acquire an additional 10% of GSI, bringing its total stake to 50%, upon completion of the Definitive Feasibility Study (DFS) for Lithium Ridge or if the total development costs exceed $40 million (US).
Additionally, if GSI confirms a lithium resource reserves of 40 million tons in Phase 3, SQM will pay a success fee based on the lithium oxide content of the resource.
The agreement requires approval from the Namibian Competition Commission under the 2003 Namibian Competition Act and the transfer of the Lithium Ridge environmental permit to GSI. If approval is not granted, subsequent investments may not proceed, although Andrada considers this unlikely.
Both Andrada and SQM will appoint management teams to form a Joint Development Committee to oversee GSI’s business progress and manage the exploration and development of Lithium Ridge.
Andrada Mining operates in Namibia’s lithium-rich Erongo region and, in addition to its established tin and tantalum production, aims to develop a vertically integrated industry in Namibia. In 2023, the company successfully started production of lithium concentrate at the pilot plant of its Uis tin mine operations. It subsequently advanced the exploration of its portfolio with significant drilling results at the Lithium Ridge mine.
Lithium Ridge, which has been granted a mining licence, covers an area of approximately 3,300 hectares, approximately 35 km from the Uis mine, and holds a variety of mineralised pegmatite including lithium (mostly spodumene), tin and tantalum. To date, the company has discovered a continuous mineralized zone with a length of 6 km and detected high-grade lithium resources with 2.13% Li2O content.
Source: WeChat Official Account—青蓝能源
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