The major automotive company Stellantis (NYSE: STLA) is investing US$90 million in an early-stage lithium company based in Argentina.
Shares of Argentina Lithium & Energy Corp. (TSX-V: LIT) (OTC: PNXLF) (FSE: OAY3) shot up by over 100 per cent to $0.57 following the news on Wednesday. The stock then dipped back down to its current value of $0.44 on the TSX Venture Exchange.
The company will be using the funds for development of its four lithium projects in the country and the transaction is expected to close within the next week. Stellantis will hold a 19.9 per cent stake in the company as a result.
“We look forward to a strong and successful relationship with Stellantis and we are committed to delivering a sustainable lithium product,” said Argentina Lithium & Energy’s CEO Nikolaos Cacos.
The funds are coming from Peugeot Citroen Argentina S.A., a Stellantis subsidiary operating in the country. Stellantis and Argentina Lithium have entered a lithium offtake agreement through the deal, which will provide the automotive manufacturer with 15,000 tonnes of the metal per year for a seven-year period and may potentially be extended for a longer duration.
The company has made significant investments in Argentina’s mining sector to secure a sustainable supply of commodities needed for its electric vehicle batteries, such as the $120 million investment in McEwen Mining Inc.’s (NYSE: MUX) (TSX: MUX) Los Azules copper mine earlier this year.
Stellantis just announced a series of leadership changes taking effect in November. The company’s stock rose by 2.3 per cent Thursday to US$19.24 on the New York Stock Exchange and has steadily risen by almost 53 per cent over the past year.
Argentina’s mining industry has been growing at a rapid rate in recent days. In 2022, the country saw its highest rate of mining exploration since 2012 with US$370 million invested in mineral exploration projects.
The country plans to produce 200,000 tonnes of lithium by 2025 and aims to become the world’s third largest producer of the metal by 2027.
Lithium South Development Corporation (TSX-V: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ) is one of the early-stage companies in Argentina contributing to the country’s lithium boom.
Lithium South recently expanded the lithium brine resource at its flagship Hombre Muerto North project in the country’s Salta province by 175 per cent and started drilling a series of new wells at the site. The company is currently in the process of transitioning from an explorer to developer as a result and will be capitalizing on the 1.58 million tonne lithium resource at the project.
The site is located adjacent to a US$4 billion lithium operation run by South Korea’s company POSCO (KRX: 005490) and Allkem Ltd’s (TSX: AKE) Sal de Vida project. Livent Corporation (NYSE: LTHM), which is in the midst of completing a merger with Allkem, was also actively involved with lithium development directly south of the site for more than 25 years.
Lithium South shares are currently trading for $0.42 on the TSX Venture Exchange.
Lithium South Development Corporation is a sponsor of Mugglehead news coverage
rowan@mugglehead.com
