Azure Minerals Ltd (ASX:AZS) has received strong endorsement of the lithium potential of its Andover Project in Western Australia with global lithium giant Sociedad Química y Minera de Chile S.A. (SQM) completing a cornerstone investment of A$20 million.
The investment via wholly-owned subsidiary SQM Australia Pty Ltd gives SQM a 19.99% interest in Azure and highlights the upside potential for Andover to grow into a globally significant lithium mining and processing operation.
SQM’s funding and technical expertise is supporting Azure’s accelerated lithium exploration and development program at Andover, which is 60% owned by AZM and 40% by prominent WA-based resources investor Creasy Group.
AZS is looking to grow Andover into a globally significant lithium mining and processing operation, with funding from SQM to support the acceleration of the company’s lithium exploration and development program.
The company is now well-funded to progress its Andover ambitions and exposure to high-value battery metals including lithium, nickel, copper and cobalt.
Two tranche transaction
The acquisition of SQM’s interest comes in two tranches. The first tranche involves SQM’s subscription for 16,381,720 ordinary shares in Azure at a price of A$0.2564 per share. Tranche 1 raised A$4.2 million for Azure, giving SQM a 4.99% shareholding.
To complete Tranche 2, SQM had to meet several conditions including:
- SQM having notified Azure that it had completed and was satisfied with its due diligence investigations into Azure; and
- SQM and Azure having entered into an offtake agreement under which SQM is entitled to an offtake right in respect of up to 25% of all lithium product from mining projects in which Azure has an interest on arm’s length and commercially competitive terms.
All conditions have now been met.
SQM subscribed to an additional 61,626,471 ordinary shares in Azure at the same subscription price of A$0.2564 per share as for the first tranche, raising a further A$15.8 million for Azure.
SQM, which is now Azure's largest shareholder, has operations in Chile and Western Australia and is a global leader in lithium, potassium nitrate, iodine and thermo-solar salts markets. The company is one of the world’s largest lithium producers.
What’s next?
With funds raised, Azure is accelerating its growth strategy to advance its multi-commodity opportunity on the Andover Project.
The company is fast-tracking lithium exploration with substantial diamond and reverse circulation drilling to determine the scale of the high-grade lithium mineralisation already mapped and sampled at surface.
Azure will also continue with nickel exploration and mine development studies on the Andover and Ridgeline deposits throughout 2023.