Australian lithium explorer, Patriot Battery Metals Inc (ASX: PMT), has caught the attention of investors as its shares surged 11.6% on Tuesday. This increase in share price brings Patriot Battery Metals’ gains for the year to 125%.
The rally was triggered by an announcement from Patriot Battery Metals regarding a strategic investment and a memorandum of understanding (MOU) with Albemarle Corporation (NYSE: ALB), the world’s largest lithium producer.
Under the terms of the agreement, Albemarle will make a private placement investment of approximately C$109 million (A$123 million) in Patriot Battery Metals. This investment will secure Albemarle 7,128,341 common shares in the company at a price of C$15.29 per share. The placement price represents a 7% premium to the last closing share price of Patriot Battery Metals on the TSX Venture Exchange.
As a result of this investment, Albemarle will own around 4.9% of Patriot Battery Metals, making it the largest shareholder based on currently available information. The A$123 million raised will be used to accelerate development activities at Patriot’s Corvette Lithium Project, as well as for general corporate purposes. The company already held approximately A$64 million in cash and cash equivalents on its balance sheet as of the end of March 2023.
Furthermore, the memorandum of understanding grants Albemarle exclusivity with Patriot for nine months, with the option to extend. During this period, Albemarle will assess the potential for downstream lithium hydroxide processing at the Corvette project.
It is worth noting that Albemarle’s investment comes shortly after Patriot Battery Metals claimed to have the largest lithium pegmatite mineral resources in the Americas, with approximately 109.2 million tonnes at 1.42% Li2O at its Corvette project. This mineral resource has positioned the company as the eighth-largest lithium project in the world.
Despite the positive news, the share price of Patriot Battery Metals reacted negatively following the announcement.
Patriot Battery Metals’ partnership with Albemarle, along with the strategic investment and memorandum of understanding, demonstrates the confidence and support from the world’s largest lithium producer. The financial injection will facilitate the development of Patriot Battery Metals’ Corvette Lithium Project and reinforce its competitive position in the lithium market. With the backing of Albemarle, Patriot Battery Metals is well-positioned to capitalize on the booming demand for lithium and make significant strides in the industry.
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