Azure’s lithium potential lures $20m investment from major producer SQM

Azure has received the kind of validation most junior miners only dream off, a major cornerstone investment of up to $20m from global lithium producer Sociedad Química y Minera de Chile.

The investment – made through the Chilean major’s wholly-owned subsidiary SQM Australia – highlights the attractiveness of the company’s mineral-rich Andover joint venture project with the Mark Creasy-led Creasy Group (40%), which currently hosts a maiden resource of 4.6 million tonnes grading 1.11% nickel, 0.47% copper and 0.05% cobalt at the Andover deposit.

While this is likely to increase further with a maiden resource due for the Ridgeline deposit in the current quarter, the prize undoubtedly drew SQM’s eye is the abundant spodumene-rich, lithium-bearing pegmatites outcropping in an 8km long and up to 4km wide corridor within the project.

Surface rock chip sampling has already confirmed high grades of lithium in the outcropping pegmatites with notable assays of 3.32% Li2O, 2.65% Li2O and 1.62% Li2O.

Sizeable strategic investment

This has proven to be enough of a draw for SQM to snap up shares in Azure Minerals (ASX:AZS) at 25.64c each – a 13.9% premium to the last traded price of 22.5c on 6 January 2023 and a 12.4% premium to the 10-day volume weighted average price.

SQM has already made an initial $4.2m investment and will invest a further $15.8m subject to the satisfaction of certain conditions to earn a 19.9% stake, which will make it the company’s largest shareholder.

“We’re very pleased to welcome SQM as a substantial and strategic investor in Azure, which demonstrates their strong interest and belief in the lithium potential of the Andover Project,” managing director Tony Rovira said.

“This is a significant milestone event and is a strong endorsement of Azure and our projects by one of the world’s leading lithium producers.

“The new relationship will allow Azure to draw upon SQM’s technical expertise in pegmatite-hosted lithium exploration, project development, production and marketing, providing Azure with strong support as we look to develop the Andover lithium assets.

“Azure is now in a very strong financial position and, following completion of both tranches of the transaction with SQM, Azure will have a cash balance of more than $25 million which will be used to accelerate lithium exploration through a program of intensive drilling across the Andover Project.”

SQM itself is no stranger to Australia. Besides being one of the world’s largest lithium producers, it is also in a joint venture with Wesfarmers (ASX:WES) in the Mt Holland lithium project, which will be a unique, fully-integrated operation capable of producing about 50,000t of battery-quality lithium hydroxide from its plant at Kwinana, Western Australia.

Lithium exploration

With the SQM investment squared away, Azure will now fast track lithium exploration at Andover with a focused drilling program due to start later this quarter.

Further assays are also due from helicopter pegmatite sampling carried out towards the end of 2022.

Nickel exploration and mine development studies on the Andover and Ridgeline deposits will also continue through 2023.

This article was developed in collaboration with Azure Minerals (ASX: AZS), a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.