Critical raw materials producer Andrada Mining and lithium chemicals producer Sociedad Química y Minera de Chile SA, through its subsidiary SQM Australia, have entered into a three-stage earn-in agreement to partner in developing the Lithium Ridge asset (ML133), which is located about 35 km away from Andrada’s Uis mine, in Namibia.

The agreement is subject to conditions precedent, including approval by the Namibian Competition Commission.

A new wholly owned subsidiary of Uis Tin Mining Company, Grace Simba Investments (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 that SQM agrees to pay Andrada a $500 000 participation fee on signing and a further $1.5-million upon satisfaction of conditions precedent; SQM has an option to invest $20-million over three-and-a-half years, in different stages, to earn a 40% ownership of GSI; and 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 Joint Ore Reserves Committee-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, the company avers.

Andrada CEO Anthony Viljoen says the company is pleased to be part of the first African partnership that SQM has entered, and that the partnership will establish 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,” he adds.

“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,” says SQM International Lithium Division CEO Mark Fones.