REG - Andrada Mining Ltd - Andrada partners with SQM to develop Lithium Ridge

Andrada MiningAnnouncement

09/09/2024 07:00

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RNS Number : 3300D  Andrada Mining Limited  09 September 2024

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information will be in the public domain.
 
Andrada Mining LimiteD

("Andrada" or the "Company")

Andrada partners with SQM to develop Lithium Ridge

Andrada Mining Limited (AIM: ATM, OTCQB: ATMTF), a critical raw materials
producer with mining and exploration assets in Namibia, is pleased to announce
that one of the world's largest lithium chemicals producer, Sociedad Química
y Minera de Chile SA through its subsidiary SQM Australia (Pty) Ltd ("SQM"),
has entered into a three stage earn in agreement to partner with the Company
in developing the Lithium Ridge asset (ML133) (the "Agreement"). The Agreement
is subject to conditions precedent, including the Namibian Competition
Commission approval, as detailed below. The Company management believe that
the approval will be obtained, and a further announcement will be made at that
time.

Highlights

§ A new wholly owned subsidiary of Uis Tin Mining Company Limited ("UTMC"),
Grace Simba Investments (Pty) Ltd ("GSI"), now holds the Lithium Ridge mining
licence.

§ The SQM Agreement brings both the financial and technical capabilities
required to explore and develop Lithium Ridge.

§ Under the Agreement, SQM can earn into GSI by solely funding both the
exploration and, in the future, a Definitive Feasibility Study ("DFS") at
Lithium Ridge. The key considerations and milestones contained in the
Agreement are:

−   SQM agrees to pay Andrada a US$500 000 participation fee on signing
and a further US$1.5 million upon satisfaction of conditions precedent (as
detailed below).

−   SQM has an option to invest US$20 million over three and a half years,
in different stages to earn a 40% ownership of GSI.

−   Subsequent funding of the DFS will enable SQM to attain up to 50%
ownership in GSI.

§ Payment of a one-off success fee will be payable by SQM should Andrada
complete a JORC (2012) compliant Mineral Resources Estimation exceeding 40
million tonnes during the third earn-in period. The fee will be calculated
based on the percentage of lithium oxide content in the resource.

§ Andrada will manage and operate the project during the earn-in period.

§ Andrada and SQM will create a joint development committee ("JDC") to
oversee the development of GSI. The JDC will be constituted of an equal
representation of members from SQM and Andrada management.

§ The Agreement enables Andrada shareholders and Namibian stakeholders to
benefit from the accelerated development of one of Andrada's lithium assets.

Anthony Viljoen, Chief Executive Officer, commented:

"We are incredibly pleased to announce our partnership with SQM, a global
leader in the lithium industry and to be part of the first African partnership
that SQM has entered.  This partnership solidifies our belief in the Lithium
Ridge asset as a potential world-class resource, and further establishes
Andrada as a multi-asset, polymetallic explorer and miner. We believe this
partnership also significantly enhances the value of our entire asset
portfolio. Furthermore, partnering with SQM provides the ideal partner to
unlock the full potential of Lithium Ridge, while allowing continuation of the
development of Uis through our existing financing relationships.

The SQM partnership aligns perfectly with our strategic objectives, enabling
us to develop our neighbouring lithium asset, and to accelerate exploration
initiatives. The terms of this agreement establish a long-term, value-creating
relationship that incentivises operational milestones and delivers sustained
returns for our shareholders. The introduction of a substantial player in the
global lithium market will also place Namibia at the forefront of the African
lithium development trajectory and unlock value for the Namibian mining
industry.

Mark Fones, SQM International Lithium division CEO, commented:

"We are excited to announce the completion of this agreement, which confirms
our commitment on finding the best lithium assets in the world that
efficiently diversify our portfolio. Namibia is among the top mining
jurisdictions in the region, and we are pleased to begin exploration with a
proven partner like Andrada Mining."

Lithium Ridge Licence

The Company operates in the lithium rich Erongo Region of Namibia and aims to
develop a vertically integrated industry within the country, in addition to
its established tin and tantalum production. In 2023, the Company successfully
commenced the production of lithium concentrate from the pilot plant at its
Uis operations. Furthermore, the Company advanced exploration across its asset
portfolio during the year, which delivered significant results through
encouraging drill intersections at Lithium Ridge.

Lithium Ridge is a fully permitted mining licence covering an area of
approximately 3,300 ha and located approximately 35 km from Uis Mine. It hosts
multiple pegmatites with mineralisation including lithium (spodumene
dominant), tin and tantalum. The exploration programmes to date, have found
continuous mineralisation along a 6 km strike length. Reverse circulation
drilling intercepted lithium grades of up to 2.13% Li₂O, proving high grade
mineralisation that extends at depth.

Details of the earn-in agreement

§ The Lithium Ridge licence has been transferred into GSI that is 100% owned
by Uis Tin Mining Company a wholly owned subsidiary of Andrada.

§ SQM and Andrada have today entered into the earn-in agreement pursuant to
which SQM can earn up to a 50% interest in GSI through fully funding
exploration and the DFS, as detailed below.

§ Upon execution of the Agreement, SQM has committed to pay Andrada a US$2
million participation fee in two tranches. The first US$500 000 is due
following signing of the Agreement and the balance US$1.5 million will be paid
on satisfaction of conditions precedent.

§ The Agreement is subject to the approval of the transaction from the
Namibian Competition Commission under the Namibian Competition Act 2003 and
the transfer of the Lithium Ridge Environmental Clearance Certificate into
GSI. It is anticipated that these conditions will be achieved, and a further
announcement will be made at that time. In the event these approvals are not
obtained the joint venture would not progress, but the directors of the
Company consider this to be highly unlikely.

§ Thereafter, SQM will be entitled to earn its interest in GIS as follows:

−   STAGE  1: SQM may earn a 30% interest in GSI by funding US$7 million
towards exploration over an 18-month period.

−   STAGE 2: SQM may earn an additional 10% interest in GSI, thereby
increasing its shareholding to 40%, through additional funding of US$13
million for exploration over a further 24-month period.

−   STAGE 3: SQM may earn an additional 10% interest in GSI, thereby
increasing its shareholding to 50%, through the achievement of the earlier of,

·      the completion of a Lithium Ridge DFS, OR

·      a total of US$40 million being incurred on development.

§ In addition, SQM will pay a contingent success fee if GSI Andrada declares
a 40 million tonne resource during stage three. The fee will be calculated in
accordance with the lithium oxide content in the resource.

§ Andrada will be responsible for the exploration and development of Lithium
Ridge as the appointed manager supervised by the JDC.

Andrada looks forward to working with SQM in developing the spodumene-rich
Lithium Ridge asset, unlocking long-term value, and will provide updates in
due course.

About SQM

SQM is a global company that is listed on the New York Stock Exchange and the
Santiago Stock Exchange (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A).
SQM develops and produces diverse products for several industries essential
for human progress, such as health, nutrition, renewable energy and technology
through innovation and technological development.  SQM aims to maintain its
leading world position in the lithium, potassium nitrate, iodine and
thermo-solar salts markets.

About Andrada Mining Limited

Andrada Mining Limited is listed on the London Stock Exchange (AIM) with
mining assets in Namibia, a top-tier investment jurisdiction in Africa.
Andrada strives to produce critical raw materials from a large resource
portfolio, to contribute to a more sustainable future thereby improving lives
and the upliftment of communities adjacent to its operations. Leveraging on
its strong foundation in Namibia, a top-tier African jurisdiction, Andrada is
on a strategic path to becoming a producer of critical metals including
lithium, tin and tantalum. These metals are important enablers of the green
energy transition, being essential for components of electric vehicles, solar
panels and wind turbines.

CONTACT

 Andrada Mining                       +27 (11) 268 6555

Anthony Viljoen, CEO

 Sakhile Ndlovu, Investor Relations

 NOMINATED ADVISOR & BROKER
 Zeus Capital                          +44 (0) 2023 829 5000

Katy Mitchell

 Harry Ansell

 Andrew de Andrade

 CORPORATE BROKER & ADVISOR
 H&P Advisory Limited                 +44 (0) 20 7907 8500

Andrew Chubb

 Jay Ashfield

 Matt Hasson

 Berenberg                            +44 (0) 20 3753 3040

Jennifer Lee

 Natasha Ninkov

 FINANCIAL PUBLIC RELATIONS
 Tavistock (United Kingdom)           +44 (0) 207 920 3150

Jos Simson

                                    andrada@tavistock.co.uk
 Charles Vivian

 Josephine Clerkin

 
Additional Information About ML133

ML133 is a mining licence held by Andrada, and as set out in the Company's
audited accounts for the period ended 29 February 2024 there was no loss or
turnover attributable to the asset and the carrying value based on the
expenditure on the licence is £1.6 million (c US$2.1 million).

 

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