‘Significant step forward’: Power surges 20pc after sealing Incahuasi lithium JV deal with DLE provider Summit
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DLE provider Summit Nanotech has paid $3.125m as part of a joint venture with ASX-listed Power Minerals to develop the Incahuasi salar, part of its Salta lithium project in Argentina.
The two companies inked binding terms in August over the Incahuasi salar (salt lake) with direct lithium extraction (DLE) technology provider Summit agreeing to provide a strategic investment to drive its development and earn a 30% interest in the joint venture.
Incahuasi, one of five salares that sit within seven mining leases at the 147.07km2 Salta project, currently has a resource of 249,308t of lithium carbonate equivalent at an average concentration of 198mg/l lithium.
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%.
During the due diligence phase, it successfully completed first stage test work proving that its sorbent and water recovery solution can effectively treat brines from Power Minerals’ (ASX:PNN) Incahuasi to produce a low impurity lithium chloride concentrate.
This triggered its commitment to subscribe for US$2m ($3.15m) worth of PNN shares priced at 50c each – a 26% premium to the 20-day volume weighted average price – as the first tranche investment.
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.
Summit also has the option to earn a further 15% in the JV over Incahuasi by participating in a definitive feasibility study within one year of completing its initial earn-in.
This includes completion of an onsite demonstration plant for production of lithium chemical products at Incahuasi within a further three years from the date of such election with Summit set to commit US$20m towards its cost.
It can also increase its stake by a further 4.9%, giving it 34.9% or 49.9% if it exercises the second option, if the results of the denaLi pilot testing meet specified performance requirements of one Tier-1 or two Tier-2 potential offtake partners.
The Summit deal isn’t the only investment in the Salta project.
Power has also secured a $2.6m strategic investment from Mingjin New Energy Development to accelerate development of the Salta project.
The company has now received confirmation that the first tranche payment of $3.125m has been transferred, allowing both parties to executive their option and JV agreement for the Incahuasi salar.
Power will also the funds to expand the salar’s resource, drill pumping wells along with carrying out water drilling and engineering studies to complete the PFS.
“This represents another significant step forward in our partnership with Summit Nanotech for the funding and development of our Incahuasi salar at the Salta lithium project,” managing director Mena Habib said.
“The transfer of the first tranche of Summit’s strategic investment comes after Summit successfully completed due diligence and Power secured shareholder approval.
“We now look forward to deploying the funds to accelerate the development of the Incahuasi salar.
“Summit and its patented and sustainable denaLi DLE technology is 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.”
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.