Andrada Mining Limited Andrada partners with SQM to develop Lithium Ridge

RNS Number : 3300D

Andrada Mining Limited

09 September 2024

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information will be in the public domain.

 

Andrada Mining LimiteD

("Andrada" or the "Company")

Andrada partners with SQM to develop Lithium Ridge

Andrada Mining Limited (AIM: ATM, OTCQB: ATMTF), a critical raw materials producer with mining and exploration assets in Namibia, is pleased to announce that one of the world's largest lithium chemicals producer, Sociedad Química y Minera de Chile SA through its subsidiary SQM Australia (Pty) Ltd ("SQM"), has entered into a three stage earn in agreement to partner with the Company in developing the Lithium Ridge asset (ML133) (the "Agreement"). The Agreement is subject to conditions precedent, including the Namibian Competition Commission approval, as detailed below. The Company management believe that the approval will be obtained, and a further announcement will be made at that time.

Highlights

§ A new wholly owned subsidiary of Uis Tin Mining Company Limited ("UTMC"), Grace Simba Investments (Pty) Ltd ("GSI"), now holds the Lithium Ridge mining licence.

§ The SQM Agreement brings both the financial and technical capabilities required to explore and develop Lithium Ridge.

§ Under the Agreement, SQM can earn into GSI by solely funding both the exploration and, in the future, a Definitive Feasibility Study ("DFS") at Lithium Ridge. The key considerations and milestones contained in the Agreement are:

−   SQM agrees to pay Andrada a US$500 000 participation fee on signing and a further US$1.5 million upon satisfaction of conditions precedent (as detailed below).

−   SQM has an option to invest US$20 million over three and a half years, in different stages to earn a 40% ownership of GSI.

−   Subsequent funding of the DFS will enable SQM to attain up to 50% ownership in GSI.

§ Payment of a one-off success fee will be payable by SQM should Andrada complete a JORC (2012) compliant Mineral Resources Estimation exceeding 40 million tonnes during the third earn-in period. The fee will be calculated based on the percentage of lithium oxide content in the resource.

§ Andrada will manage and operate the project during the earn-in period.

§ Andrada and SQM will create a joint development committee ("JDC") to oversee the development of GSI. The JDC will be constituted of an equal representation of members from SQM and Andrada management.

§ The Agreement enables Andrada shareholders and Namibian stakeholders to benefit from the accelerated development of one of Andrada's lithium assets.

Anthony Viljoen, Chief Executive Officer, commented:

"We are incredibly pleased to announce our partnership with SQM, a global leader in the lithium industry and to be part of the first African partnership that SQM has entered.  This partnership solidifies our belief in the Lithium Ridge asset as a potential world-class resource, and further establishes Andrada as a multi-asset, polymetallic explorer and miner. We believe this partnership also significantly enhances the value of our entire asset portfolio. Furthermore, partnering with SQM provides the ideal partner to unlock the full potential of Lithium Ridge, while allowing continuation of the development of Uis through our existing financing relationships.

The SQM partnership aligns perfectly with our strategic objectives, enabling us to develop our neighbouring lithium asset, and to accelerate exploration initiatives. The terms of this agreement establish a long-term, value-creating relationship that incentivises operational milestones and delivers sustained returns for our shareholders. The introduction of a substantial player in the global lithium market will also place Namibia at the forefront of the African lithium development trajectory and unlock value for the Namibian mining industry.

Mark Fones, SQM International Lithium division CEO, commented:

"We are excited to announce the completion of this agreement, which confirms our commitment on finding the best lithium assets in the world that efficiently diversify our portfolio. Namibia is among the top mining jurisdictions in the region, and we are pleased to begin exploration with a proven partner like Andrada Mining."

Lithium Ridge Licence

The Company operates in the lithium rich Erongo Region of Namibia and aims to develop a vertically integrated industry within the country, in addition to its established tin and tantalum production. In 2023, the Company successfully commenced the production of lithium concentrate from the pilot plant at its Uis operations. Furthermore, the Company advanced exploration across its asset portfolio during the year, which delivered significant results through encouraging drill intersections at Lithium Ridge.

Lithium Ridge is a fully permitted mining licence covering an area of approximately 3,300 ha and located approximately 35 km from Uis Mine. It hosts multiple pegmatites with mineralisation including lithium (spodumene dominant), tin and tantalum. The exploration programmes to date, have found continuous mineralisation along a 6 km strike length. Reverse circulation drilling intercepted lithium grades of up to 2.13% Li₂O, proving high grade mineralisation that extends at depth.

Details of the earn-in agreement

§ The Lithium Ridge licence has been transferred into GSI that is 100% owned by Uis Tin Mining Company a wholly owned subsidiary of Andrada.

§ SQM and Andrada have today entered into the earn-in agreement pursuant to which SQM can earn up to a 50% interest in GSI through fully funding exploration and the DFS, as detailed below.

§ Upon execution of the Agreement, SQM has committed to pay Andrada a US$2 million participation fee in two tranches. The first US$500 000 is due following signing of the Agreement and the balance US$1.5 million will be paid on satisfaction of conditions precedent.

§ The Agreement is subject to the approval of the transaction from the Namibian Competition Commission under the Namibian Competition Act 2003 and the transfer of the Lithium Ridge Environmental Clearance Certificate into GSI. It is anticipated that these conditions will be achieved, and a further announcement will be made at that time. In the event these approvals are not obtained the joint venture would not progress, but the directors of the Company consider this to be highly unlikely.

§ Thereafter, SQM will be entitled to earn its interest in GIS as follows:

−   STAGE  1: SQM may earn a 30% interest in GSI by funding US$7 million towards exploration over an 18-month period.

−   STAGE 2: SQM may earn an additional 10% interest in GSI, thereby increasing its shareholding to 40%, through additional funding of US$13 million for exploration over a further 24-month period.

−   STAGE 3: SQM may earn an additional 10% interest in GSI, thereby increasing its shareholding to 50%, through the achievement of the earlier of,

·      the completion of a Lithium Ridge DFS, OR

·      a total of US$40 million being incurred on development.

§ In addition, SQM will pay a contingent success fee if GSI Andrada declares a 40 million tonne resource during stage three. The fee will be calculated in accordance with the lithium oxide content in the resource.

§ Andrada will be responsible for the exploration and development of Lithium Ridge as the appointed manager supervised by the JDC.

Andrada looks forward to working with SQM in developing the spodumene-rich Lithium Ridge asset, unlocking long-term value, and will provide updates in due course.

About SQM

SQM is a global company that is listed on the New York Stock Exchange and the Santiago Stock Exchange (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A). SQM develops and produces diverse products for several industries essential for human progress, such as health, nutrition, renewable energy and technology through innovation and technological development.  SQM aims to maintain its leading world position in the lithium, potassium nitrate, iodine and thermo-solar salts markets.

About Andrada Mining Limited

Andrada Mining Limited is listed on the London Stock Exchange (AIM) with mining assets in Namibia, a top-tier investment jurisdiction in Africa. Andrada strives to produce critical raw materials from a large resource portfolio, to contribute to a more sustainable future thereby improving lives and the upliftment of communities adjacent to its operations. Leveraging on its strong foundation in Namibia, a top-tier African jurisdiction, Andrada is on a strategic path to becoming a producer of critical metals including lithium, tin and tantalum. These metals are important enablers of the green energy transition, being essential for components of electric vehicles, solar panels and wind turbines.

CONTACT

Andrada Mining Anthony Viljoen, CEO Sakhile Ndlovu, Investor Relations	[phone]
NOMINATED ADVISOR & BROKER
Zeus Capital Katy Mitchell Harry Ansell Andrew de Andrade	[phone]
CORPORATE BROKER & ADVISOR
H&P Advisory Limited Andrew Chubb Jay Ashfield Matt Hasson	[phone]
Berenberg Jennifer Lee Natasha Ninkov	[phone]
FINANCIAL PUBLIC RELATIONS
Tavistock (United Kingdom) Jos Simson Charles Vivian Josephine Clerkin	[phone] [e-mail]

 

Additional Information About ML133

ML133 is a mining licence held by Andrada, and as set out in the Company's audited accounts for the period ended 29 February 2024 there was no loss or turnover attributable to the asset and the carrying value based on the expenditure on the licence is £1.6 million (c US$2.1 million).

 

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