Pic: Getty
It’s a deal: Zenith to build ‘significant lithium business’ with scene-stopping JV
Mining
share
The gold and base metals explorer will refocus on lithium (and related battery metals) backed by a new JV with aspiring battery chemicals producer EV Metals Group (EVM).
EVM is planning the staged development of a Battery Chemicals Complex in Saudi Arabia, which will produce up to 100,000tpa of lithium hydroxide monohydrate (LHM) and 450,000tpa of nickel sulphate.
The deal announced today will see EVM earn a 60% interest in the lithium rights in two initial 100% owned Zenith (ASX:ZNC) projects – ‘Waratah Well’ and ‘Split Rocks’ — by sole funding the completion of a feasibility study within 24 months (+$7m expenditure).
If it passes the FS stage, EVM will sole fund expenditure to a decision to mine, following which the parties will be required to fund future joint venture expenditure in accordance with their respective percentage shares.
A very deep deal
Zenith is free carried (doesn’t pay anything) and retains a 40% project share, through to the end of project studies (feasibility).
EVM is also subscribing for 20m shares at 30c each –a 20% premium to the 10-day VWAP.
“The arrangement goes much deeper than just the joint venture on these two existing Zenith projects, Split Rocks and Waratah Well, with the parties also agreeing to jointly assess new lithium/ EV-metal opportunities throughout Australia where commercially appropriate to do so,” CEO Mick Clifford says.
“The new joint venture arrangement plays to the project generation strengths of the Zenith team, matching this up with the very strong commercial and engineering capability of the EVM group.
“The arrangement puts Zenith in a unique position to build a significant lithium business in conjunction with EVM.”
An exciting spin off
To allow the Zenith team to focus on EV-metal project generative activities, it is planned the non-EV-metal projects, including base metals and gold assets will be demerged into one or more new companies to be listed on ASX.
This one could have some near-term money makers in the portfolio.
ZNC also owns that ‘free carried’ 25% interest in the world class Earaheedy discovery, so it doesn’t pay anything on this project until the completion of a bankable feasibility study – which is often the final step before financing and construction.
Its joint venture partner Rumble Resources (ASX:RTR) owns 75% of the project.
It is also getting sniffs of something big at the Split Rocks (gold), Develin Creek (copper) and Red Mountain (gold) projects.
In June last year, a maiden drilling program at the previously untouched Red Mountain target hit a whopping 13m at 8g/t gold, including 6m at 16.7g/t gold from surface.
This article was developed in collaboration with Zenith Minerals, 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.
