Capital Raising

Lithium hopeful inks $2.5m deal with China’s Huayou Cobalt to expand Namibian exploration

Wed 22 Mar 23, 1:29pm (AEST)
Mining exploration drill rig in an Australian setting
Source: iStock

Key Points

  • Investment will fund further exploration of Askari’s existing – and new – tenements in Namibia’s Uis Lithium Project
  • US$12.8bn, Hang Seng-listed Huayou Cobalt to receive 4.5 million shares, targeting 9.9% ownership stake in Askari
  • Partnership priced at a 10% premium to AS2’s VWAP as of 17 March

ASX-listed lithium explorer Askari Metals (ASX: AS2) has inked a $2.5 million deal with battery metals behemoth Zhejiang Huayou Cobalt Co (SHA:603799).

Formed via the Chinese company’s fully owned subsidiary Huayou Cobalt, the US$12.8 billion company has previously partnered with other Australian lithium and battery metals hopefuls including:

  • A lithium supply deal with Ioneer (ASX: INR) in 2022

  • Buying out Prospect Resources’ (ASX: PSC) Arcadia project in 2022

  • An equity stake in AVZ Minerals (ASX: AVZ) in 2019

Under the terms of the agreement – which remains subject to the completion of the Uis Acquisition Agreements and other conditions – Huayou will receive 4.5 million shares at an issue price of 55 cents each, representing a 10% premium to the stock’s last close on Monday.

Huayou will also receive an AS20 listed option on a 1-for-3 basis, with an exercise price of 25 cents and a 31 October 2024 expiry date.

Huayou will have the opportunity to participate in future equity issues by Askari, the Chinese company intending to grow its equity position in the company to 9.9% and maintain its equity stake by participating in future issuances.

Once the 9.9% holding target is reached, Huayou can appoint a nominee to the board of Askari.

Institutional placement

At the same time, Askari has also raised $3.25 million via an institutional placement of 6.5 million shares at an issue price of 50 cents. This provides an overall blended price of A$0.52 per share, representing a premium of approximately 4.0% to the 5-day VWAP of the share price on 17 March 2023.

Australian and international Institutional investors are participating so far, under the lead manager Canaccord Genuity alongside facilitator and adviser Peak Asset Management and Minmetals Securities.

Askari executive director Gino D’Anna emphasised his support of the deal and the welcome partnership with Huayou, “which adds credibility to our strategy in Namibia and also supports our vision to identify a major exploration discovery.”

He noted Huayo’s extensive experience in the production of cobalt and lithium in both China and global operations. This includes the firm’s recent US$422 million acquisition of the Arcadia Lithium Mine in Zimbabwe – further emphasising its willingness to invest in Africa.

“We’re aiming to demonstrate the potential scale of mineralisation at the Uis Lithium Project through drilling and exploration campaigns and lead the lithium charge in Namibia,” D’Anna said.

“Accelerating our exploration efforts at the Uis Project supports our goal to deliver a maiden resource as quickly as possible and we look forward to updating shareholders as exploration activities continue.”

How the money will be spent

If, as expected, the entire strategic investment is completed, a total of $5.725 million will be raised via the Huayou agreement and the institutional placement in the coming months.

Askari will acquire indirect interests in the exploration sites EPL7345 (LexRox Exploration) and EPL8535 (Earth Dimensions Consulting). Also part of the Uis Lithium Project in the Erongo region of central-west Namibia, these acquisitions were approved at the 20 February General Meeting.

What’s next?

The funds will be used to drive additional exploration across Askari’s wider portfolio of assets, including the company’s expanding lithium portfolio.

These include exploration activities in the Uis Lithium Project tenements that will be acquired following the completion of deals announced in October and December 2022.

Written By

Glenn Freeman

Content Editor

Glenn is a Content Editor at Livewire Markets and Market Index. Glenn has almost 20 years’ experience in financial services writing and editing. Glenn’s journalistic experience also spans energy and automotive, in both Australia and abroad – including the Middle East – where he edited an oil and gas publication in the United Arab Emirates.

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