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.
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.
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.
“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.”
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