Strike spinning off battery metals assets to focus on iron ore

Iron ore producer Strike Resources (ASX:SRK) is spinning off its lithium and graphite assets into its battery metals subsidiary Lithium Energy.

Lithium Energy will seek to list on the ASX through a $9m initial public offering of shares priced at 20c each to develop its highly prospective Solaroz lithium project in Argentina and move to secure 100 per cent of the Burke graphite project in Queensland.

The spin-off will allow Strike to focus on bringing its Paulsens East iron ore project in Western Australia’s Pilbara region into production this year and expand production from the Apurimac iron ore project in Peru while retaining significant exposure to the lithium and graphite projects through a 43 per cent interest in Lithium Energy.

Solaroz and Burke projects

The 90 per cent owned Solaroz project covers 12,000 hectares of highly prospective lithium brine mineral concessions within the Salar de Olaroz Basin in South America’s “Lithium Triangle”.

It is directly adjacent to or principally surrounded by mineral concessions being developed into production by lithium heavyweights Orocobre (ASX:ORE) and Lithium Americas Corporation. Lithium Energy will emerge with a market cap of just $16m compared to Orocobre’s circa A$1.6 billion and Lithium Americas US$2.4 billion market caps

Strike believes that the same aquifer that supplies the lithium-rich brine being extracted by Orocobre extends beneath the Solaroz concessions and previously outlined plans for a six-month program of geophysics and drilling to test the geological model

The 60 per cent owned Burke graphite project was identified by previous exploration dating back to the 1970s and has a current resource of 6.3Mt grading 16 per cent total graphitic carbon.

Under the spin-out, Lithium Energy will acquire the outstanding minority interests in the project.

Under the spin-off, Strike shareholders will have the opportunity to apply for at least 10,000 shares each in Lithium Energy and the shortfall in applications lodged by them will form a pool of shares that will be made available to the public.

Strike managing director William Johnson will serve as executive chairman of Lithium Energy while Peter Smith, who previously acted as a consultant on both Solaroz and Burke, will serve as one of the executive directors of the new company with Strike executive chairman Farooq Khan being the other executive director.

This article was developed in collaboration with Strike Resources, 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.