Power Minerals (ASX:PNN) has struck a binding term sheet (BTS) with its Canada-based direct lithium extraction (DLE) partner, Summit Nanotech, for a joint venture (JV) over the Salta Lithium project in Argentina.
The partners first announced the BTS back in August 2023 and, following due diligence work, have now put pen to paper to make the deal official.
The agreement is designed to help Power fund and develop the Incahuasi salar at the Salta project, with the end goal of producing commercial-scale high-quality lithium.
Power and Summit will now enter an option and joint venture deal, with Summit able to secure a 30% interest in the proposed JV by investing US$3 million into Power in 2 tranches and completing pilot testing of Incahuasi brines.
This testwork is designed to provide key data for a future Incahuasi Prefeasibility Study (PFS).
The first tranche has already been completed, with Summit recently subscribing for US$2 million in a Power Minerals placement.
From here, Summit has the chance to up its interest in the JV to 45% by participating in a JORC-compliant Definitive Feasibility Study (DFS) within one year of earning its initial 30% interest.
This contribution will need to include the completion of an on-site demonstration plant for the production of lithium chemical products at Incahuasi within 3 years from the date of election.
The BTS will potentially see Power holding 55% of the JV and Summit the remaining 45%, but the agreement stipulates that Summit will have the chance to earn a final 4.9% interest in the JV if the product made by its denaLi technologies meets specified quality requirements of potential tier-one or tier-two offtake partners.
Power and Summit will now establish a Technical Committee to help ensure the completion of the initial 30% option obligations.
Power Managing Direct Mena Habib says the BTS is another ‘key step’ in the companies’ mutual goal of unlocking the value of the Incahuasi salar.
“We look forward to continuing our collaborative partnership with Summit and to progressing to executing the binding joint venture to secure the development of the Incahuasi salar.”
“We look forward to continuing our collaborative partnership with Summit and to progressing to executing the binding joint venture to secure the development of the Incahuasi salar”
Power Minerals had $2.37 million cash and cash equivalents at hand as of 30 September 2023, though this was before any extra funding was received from Summit through the DLE partnership.
Write to Joshua Smith at Mining.com.au
Images: Power Minerals
