Askari teams up with Shanghai lithium heavyweight to develop battery metal plays

Askari Metals’ (ASX:AS2) share price has climbed 20% to 47.5c as the company forms a ‘strategic partnership’ with Chinese lithium heavyweight Zheijang Kanglongda. 

Zheijang is listed on the Shanghai stock exchange with a market cap of some $1.5bn; the company owns 51% of a downstream lithium chemicals producer in China. 

Ultimately, the strategic partnership will see the two companies collaborate on opportunities allowing Askari to fast-track its portfolio of lithium projects in the WA and NT. 

Myrnas Hill, a lithium project in WA’s Pilbara region, and Barrow Creek, a lithium play in the NT, are the two mines Askari has its eyes fixed most firmly on. 

Askari has logged over 1km of lithium (and gold) targets at Myrnas in early-stage work, while at Barrow, the company has found a number of promising outcrop targets. Two other projects sit in Askari’s WA portfolio: Yarrie, and Talga Hill. Talga Hill was picked up by Askari earlier this month. 

What is the partnership actually doing?

Askari notes development of the projects alongside Zheijang would see the projects “positioned to the Chinese market.” 

While the strategic partnership has definitely captured shareholder sentiment, there are no legally binding agreements, financing decisions, or studies being launched today. 

The strategic partnership is, for all intents and purposes, an early-stage agreement to collaborate together, though Askar also refers to the ‘agreement’ as a Memorandum of Understanding (MOU) today.

“Deliverables” to Askari, from Zheijang, mainly require the latter to “provide assistance” and knowledge-share with Askari. It will also Askari “access” to end-user lithium customers in China.

Askari, in turn, will give Zheijang a first right of refusal for lithium offtake down the line. 

Validates potential: Management 

“The lithium partnership agreement with Zheijang Kanglongda signifies a landmark agreement,” Askari executive director Gino D’Anna said. 

“Pursuant to the agreement…Zheijang will provide us with access to key markets within China and provide Askari with access to capital for future development.” 

Worth noting is that in the list of ‘deliverables’ cited today, there is no binding guarantee at this stage the Chinese side of the partnership will fund Askari without question. 

“Zheijang will be provided with a preferred offtake position at market prices,” D’Anna noted. 

“In addition, the company is investigating commercialisation strategies for its copper and gold projects.” 

A look at Askari's three month charts

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Askari was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.