Lithium explorer Patriot Battery Metals (ASX:PMT) has entered a subscription agreement with respect to a private placement of about CAD$109 million worth of shares to US chemical manufacturer Albemarle (NYSE:ALB).
Patriot, which has a $618.06 million market capitalisation, reports Albemarle will subscribe for around 7.128 million PMT shares at CAD$15.29 per share — a 7% premium to Patriot’s closing price on the TSX Venture Exchange (TSXV) on 31 July 2023 and a 10% premium to the 10-day volume weighted average price (VWAP) of Patriot’s shares on the TSXV until 31 July 2023.
Once the deal closes, Albemarle will hold about 4.9% of Patriot’s issued and outstanding common shares on a fully diluted in-the-money basis, or 6.4% on a non-diluted, issued, and outstanding basis.
Patriot says the proceeds from this strategic investment will be used to accelerate development activities at its Corvette Lithium Project in the Eeyou Istchee James Bay region of Quebec, Canada.
At the closing of the strategic investment, both Patriot and Albemarle will enter into an investor rights agreement for a 12-month term, under which Albemarle will have the right to receive notices regarding participating in future capital raises to maintain its ownership level.
This investor rights agreement will include a standstill undertaking pursuant to Albemarle agreeing not to increase its stake to greater than 4.9% on a fully diluted in-the-money basis and a covenant from Albemarle to vote in favour of management’s recommendations on ordinary matters to be approved by shareholders of the company, subject to certain customary conditions and exceptions.
Once the strategic investment closes, Patriot reports it will enter a non-binding Memorandum of Understanding (MoU) with Albemarle to look at partnership opportunities to assess the viability of a downstream lithium hydroxide plant integrated with Corvette in Canada or the US, including options in Quebec.
The MoU includes an exclusivity period for an initial 9 months, which may be extended. Patriot expects the strategic investment to close on or before 4 August 2023 and notes it is subject to TSXV approval and other customary closing conditions.
Shares under the investment will also be subject to a statutory hold period of 4 months and a day in accordance with applicable securities regulations. Macquarie Capital is acting as financial advisor to Patriot and will receive an advisory fee equal to 3% of the gross proceeds of the strategic investment.
Commenting on the strategic investment, Patriot Battery Metals President and Chief Executive Officer (CEO) Blair Way says: “We could not be more pleased to have welcomed Albemarle to invest in Patriot. I believe both Patriot and Albermarle can be a big part of building out the required front-end to the lithium chemicals supply chain in North America and Europe over the coming years.
The additional funding will allow us to more aggressively advance the Corvette Property through drilling, permitting, study work and more.”
“We could not be more pleased to have welcomed Albemarle to invest in Patriot”
Albemarle VP Lithium Resources Alexander Thompson says the company looks forward to collaborating with Patriot to better understand the Corvette property and the opportunities this project represents for the North American battery materials supply chain.
Albemarle is a US-based chemical manufacturer focused on creating lithium and bromine resources for the mobility, energy, connectivity, and health sectors.
Patriot Battery Metals is a Vancouver-based lithium explorer focused on advancing its Corvette Property in the James Bay region of Quebec. On Monday (31 July 2023), the company reported it had delineated the ‘largest’ lithium Mineral Resource Estimate (MRE) in the Americas at the CV5 Spodumene Pegmatite within the project.
According to its latest presentation published on Monday, Patriot had CAD$56.7 million cash at hand as of 31 March 2023.
Write to Harry Mulholland at Mining.com.au
Images: Patriot Battery Metals
