Lithium deal all upside for Zenith Minerals

A deal to offload its non-core lithium portfolio for cash and shares represents a potentially big win for Zenith and its shareholders.

In early 2020 Zenith Minerals (ASX:ZNC) refined its exploration strategy with a specific focus on gold and base metals in Australia.

This portfolio of projects – Split Rocks, Red Mountain, and Develin Creek — is yielding some very good results.

Meanwhile, a series of non-core projects have been either divested, dropped or joint ventured.

Zenith’s very promising US lithium projects will now be taken on by joint venture partner and private US company Bradda Head in exchange for cash and equity.

Zenith has received US$250,000 in cash and will retain a 15 per cent equity position in Bradda until the earlier of an IPO or two years.

“We feel that the Bradda Head’s plan to take this portfolio forward in return for a solid equity position (plus cash) is a good solution for both parties,” Zenith chairman Peter Bird says.

“Importantly, the company will maintain exposure to the United States lithium projects through its shareholding interest in Bradda Head.”

The USA Lithium projects are perfectly positioned to provide future supply to the growing USA domestic lithium battery market, he says.

“As a significant shareholder, we will assist as and where we can to ensure a mutual value pathway for both companies and their respective shareholders. We recognise that there is significant interest in this battery metals sector currently and the Bradda Head ‘pure play’ should ensure a good outcome for respective participants.”

Bradda is targeting a major drill campaign at the Wikieup lithium project in Arizona, aiming to define maiden mineral resources under JORC.

Permitting is in progress with a ~$US1M drilling campaign anticipated to commence in calendar Q2 2021.

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.