Lithium | Andrada Partners with SQM to Develop Lithium Assets in Namibia

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Lithium | Andrada Partners with SQM to Develop Lithium Assets in Namibia

Date：2024-09-12

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Keyword tags： Lithium Africa

London-listed mining company Andrada Mining Limited (AIM: ATM; OTCQB: ATMTF) announced on September 9th that it will collaborate with Chilean lithium giant SQM to jointly develop lithium resources in Namibia. Andrada Mining, which possesses mining and exploration assets in Namibia for lithium, tin, and tantalum, has a mining license for the Lithium Ridge mining area near the Uis Tin Mine. This license, held by the wholly-owned subsidiary of UTMC (Uis Tin Mining Company Limited), allows for the development of a 3,300-hectare mine.

The mining license for Lithium Ridge is currently held by GSI (Grace Simba Investments), a subsidiary of UTMC and a grandchild company of Andrada Mining. SQM's subsidiary, SQM Australia (Pty) Ltd, plans to acquire up to 50% of GSI through a three-phased investment approach.

SQM will pay Andrada a participation fee of $2 million, with $500,000 due at the signing of the agreement and the remaining $1.5 million upon satisfaction of the conditions precedent.

Subsequently, SQM will invest in three stages to gradually acquire 50% of GSI:

Stage 1: Over the first 18 months, SQM will invest $7 million to acquire a 30% stake in GSI.

Stage 2: Over the next 24 months, SQM will invest an additional $13 million for exploration, acquiring an additional 10% stake and increasing its ownership to 40%.

Stage 3: SQM may acquire an additional 10% stake in GSI, thereby increasing its ownership to 50%, upon the earlier of completion of a Definitive Feasibility Study (DFS) at Lithium Ridge, or

incurring $40 million in development expenses.

Furthermore, if GSI declares a lithium resource of 40 million tonnes during the third stage, SQM will also pay a contingent success fee. This fee will be calculated based on the lithium oxide content in the resource.

The agreement is subject to approval by the Namibian Competition Commission under the Namibian Competition Act of 2003 and the transfer of the Lithium Ridge Environmental Clearance Certificate to GSI. If these approvals are not obtained, further investment will not proceed, although Andrada considers this unlikely.

Andrada and SQM will also establish a joint development committee (JDC) composed of management personnel from both companies to oversee the development of GSI and manage exploration and development at Lithium Ridge.

Andrada Mining operates in Namibia's lithium-rich Erongo region 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 began producing lithium concentrate from a pilot plant at its Uis operations. The company has since advanced exploration across its asset portfolio, achieving significant results and encouraging drill intersections at Lithium Ridge.

Lithium Ridge holds a mining license covering an area of approximately 3,300 hectares, located about 35 kilometers from the Uis Mine. It hosts multiple pegmatites with mineralization, including lithium (dominantly spodumene), tin, and tantalum. Exploration to date has revealed continuous mineralization along a 6-kilometer strike length, with high-grade lithium intercepts of up to 2.13% Li₂O, indicating high-grade mineralization that extends at depth.

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