Power forms JV with Summit to explore Direct Lithium Extraction at Incahuasi salar

DLE technology leader Summit to make US$3m strategic investment at premium
Summit and Power to form JV to develop the Incahuasi salar
Due diligence included successful use of Summit’s DLE tech to produce lithium chloride concentrate

Power and Summit Nanotech are proceeding with the formation of a joint venture into the potential use of the latter’s direct lithium extraction (DLE) technology at the Salta project in Argentina.

The two companies had signed a binding term sheet a little less than a month ago for a strategic investment and JV over the Incahuasi salar (salt lake) at Power’s Salta lithium project in Argentina.

Under this agreement, Summit had agreed to provide Power Minerals (ASX:PNN) with a strategic equity capital investment of up to US$3m to drive the development of the Incahuasi salar and earn interests in the JV.

Summit is a world-leader in sustainable DLE with its patented denaLi technology able to produce lithium from brines with over 95% lithium recovery, best-in-class low freshwater use, minimal consumables and greenhouse gases as well as low power consumption whilst reducing impurities by over 98%.

In May this year, Power defined a maiden resource of 249,308t of lithium carbonate equivalent at an average concentration of 198mg/l lithium for the Incahuasi salar, one of five salares that sit within seven mining leases at the 147.07km2 Salta project.

Adding further interest, Incahuasi is adjacent to Ganfeng Lithium’s Mariana that has a total resource of 8.12Mt LCE.

Power has also secured a $2.6m strategic investment from Mingjin New Energy Development to accelerate development of the accelerate development of the Salta project.

Joint venture and US$2m investment — at a 26% premium

Under the due diligence phase, Summit had successfully completed first stage test work proving that its denaLi technology can effectively treat brines from Power’s Incahuasi to produce a low impurity lithium chloride concentrate.

It will now subscribe for US$2m worth of Power shares priced at 50c each – a 26% premium to the 20-day volume weighted average price – as one of the key steps towards earning a 30% interest in the JV over the Incahuasi Salar.

Summit will also have to subscribe for a further US$1m worth of PNN shares at a 25% premium to the 20-day VWAP within 18 months from the execution of the binding terms sheet, complete pilot testing of brines from Incahuasi and deliver a performance report on the production of lithium chemical products to positively validate the use of its technology.

Additionally, the technology provider will contribute to a JORC (and/or NI 43-101) standard Pre-Feasibility Study at the salar.

Power will use the funds to expand the Incahuasi JORC resource, drilling both pumping and water wells as well as carrying out engineering studies required to complete a PFS.

“We are delighted with the progress of our partnership with Summit Nanotech, and their successful completion of due diligence is a significant, positive step,” managing director Mena Habib said.

“We now look forward to executing a formal joint venture agreement and receiving the first tranche of Summit’s strategic investment into the Incahuasi salar, which will help us fast-track development plans for this key asset within the Salta lithium project.

“We see Summit and its patented and sustainable denaLi DLE technology as the ideal partner to help us unlock the value of the Incahuasi salar, and realise our goal of producing commercial-scale volumes of high-quality lithium from Incahuasi.”

Next steps

Both parties will now move to execute the joint venture agreement that will allow Power to receive the first US$2m strategic investment.

Separately, it will progress ground field work at the Rincon and Pocitos salares – also located within the Salta project – after securing Environmental Impact Report (EIR) approval.

This article was developed in collaboration with Power 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.