SQM will invest A$20m in Azure to obtain 19.99% of Azure’s share capital and will become Azure’s largest shareholder
SQM Australia to buy stake in Azure. (Credit: Alex Banner from Pixabay)
Australian mineral exploration company Azure Minerals announced that SQM Australia is set to invest up to A$20m ($13.8m) in the company, to acquire a 19.99% interest, under a two-stage transaction.
SQM Australia is a wholly-owned subsidiary of global lithium company Sociedad Química y Minera de Chile.
In the first tranche of the transaction, SQM will subscribe for 16,381,720 ordinary shares of Azure at a price of A$0.2564 per share, allowing Azure to raise A$4.2m.
The second tranche is subject to the satisfaction of certain conditions, including completion of due diligence investigations, and Azure signing an offtake agreement SQM.
Under the offtake agreement, SQM is entitled to offtake 25% of all lithium products in which Azure has an interest.
The strategic investment by SQM will support the lithium mining and processing operation at its majority-owned Andover project, said Azure.
Azure managing director Tony Rovira said: “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.”
Upon completion of the second tranche, SQM will subscribe for an additional 61,626,471 ordinary shares in Azure at a price of A$0.2564 per share, allowing Azure to raise A$15.8m.
With the completion of both tranches, SQM will invest A$20m in Azure, obtain 19.99% of Azure’s share capital, and will become Azure’s largest shareholder.
In addition to Offtake Agreement, SQM will hold the right to appoint a director to Azure’s Board of Directors, and the right to form a Technical Committee to advise on the exploration.
Andover is a nickel, copper, cobalt, and lithium project located in the West Pilbara region.
Azure has already discovered two Ni-Cu-Co deposits at Andover and released a maiden mineral resource (MRE) for the Andover deposit.
Recently, the company has identified abundant spodumene-rich, lithium-bearing pegmatites outcropping within the Andover project.
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 program of intensive drilling across the Andover Project.”