Novo Resources will join forces with SQM Australia after the latter agreed to pay $10 million for a 75 per cent interest in five of the former’s lithium-nickel tenements in Western Australia’s West Pilbara region. The two companies will create the “Harding Battery Metals” joint venture, with the deal also including an option over additional tenements held by Novo in the Pilbara.
Novo Resources will join forces with SQM Australia after the latter agreed to pay $10 million for a 75 per cent interest in five of the former’s lithium-nickel tenements in Western Australia’s West Pilbara region.
The two companies will create the “Harding Battery Metals” joint venture (JV), with the deal also including an option over additional tenements held by Novo in the Pilbara.
SQM Australia is a wholly-owned subsidiary of global lithium giant Sociedad Química y Minera de Chile. The 660-square-kilometre tenement package is located next to Azure Minerals’ Andover lithium-nickel project and Artemis Resources’ Carlow Castle gold-copper-cobalt project and the JV will be managed by SQM.
Novo retains a 25 per cent interest in the lithium and nickel rights of the five tenements, while also maintaining 100 per cent ownership of all gold, silver, copper, lead, zinc and platinum group elements (PGE) found on the holdings.
SQM will have a 12-month option to acquire a 75 per cent interest in additional West Pilbara tenements held by Novo, with any options exercised to be held by the Harding Battery Metals JV under the same 75:25 terms.
Novo, in addition to being free-carried until a decision to mine has been approved by the JV, will also be entitled to a contingent success payment based on the lithium contained in a JORC-compliant ore reserve once SQM completes a feasibility study.
The company says the $10 million upfront payment will be used to continue its focus on primary gold exploration and potential campaigns for minerals other than lithium and nickel on the tenements held by the JV.
Novo Resources executive co-chairman and acting chief executive officer Michael Spreadborough said: “To be participating in a JV with a global lithium leader like SQM is an excellent outcome for Novo and will see us receive an immediate payment of A$10 million that will further boost cash reserves for our primary gold exploration focus. Meanwhile, SQM can focus on the battery metals prospectivity of the West Pilbara area and our shareholders can benefit from future exploration success with a free-carried interest until a decision to mine.”
SQM has been active in its search for lithium in WA through its 50 per cent JV with Wesfarmers for the Mt Holland lithium project, in addition to holding shares worth about 19 per cent in Azure. Earlier today, Azure revealed it had entered into a new binding implementation deed with SQM and Hancock Prospecting for the two mining giants to acquire 100 per cent of the company. If successful, the acquisition will give SQM even more access to battery minerals within the Pilbara region.
Novo is also no stranger to forming a JV after it entered into an agreement with private mining services company Liatam Mining late last year. Liatam had been granted the right to earn the 80 per cent interest in battery mineral rights at the Quartz Hill project by spending $1.5 million in two years.
Novo retains its 20 per cent interest, in addition to holding all other rights within the project, including for gold and silver. In accordance with the original deal, it will also be free-carried to either a bankable feasibility study or $20 million in spending at Quartz Hill, depending on which occurs first.
Novo officially launched on the ASX in September when a successful IPO netted the company $7.5 million before costs through the issue of 37.5 million common shares. The company is also listed in Canada on the TSX.
In June, Novo secured the support of giant neighbour De Grey Mining as a cornerstone investor and potential JV partner in a deal worth up to $35 million at the Becher gold project in the Pilbara.
As part of the deal, De Grey has the right to earn a 50 per cent interest in Novo’s Becher project and adjacent tenements by spending $25 million in four years when the 50:50 “Egina” JV will be formed, with a minimum $7 million to be spent within 18 months.
In all, it is clear the company has been busy – and getting in bed with a notable giant such as SQM can only escalate the activity.
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