Thor Mining PLC’s (LON:THR) shares shot higher today after it agreed to buy a 25% stake in a US lithium explorer for US$75,000.
Thor will purchase holding in US Lithium Pty Limited (USL), which owns lithium projects in Arizona and New Mexico, from Pembridge Resources using its existing cash reserves.
WATCH: Capital Network's Sam Catalano on Thor Mining
Under a binding sale and purchase agreement, Thor will have an option to acquire a further 75% of USL over a period of 45 business days.
Thor chairman Mick Billing said lithium is a key ingredient in lithium ion batteries that power billions of smartphones, laptops and electric cars.
Thor jumps on lithium band-wagon as demand grows...
Lithium demand is expected to rise 16% per year from 175,000 tonnes in 2015 to 775,000 tonnes by 2025, Billing said, citing analysts at Morningstar.
"The acquisition of lithium interests in the US is particularly exciting for Thor,” Billing said.
WATCH: Lithium acquisition 'particularly exciting' for Thor Mining, says chairman Mick Billing
“The lithium projects are well positioned geographically and offer, we believe, significant upside value potential should the work on the ground continue to demonstrate the type of success achieved to date.”
Billing said the lithium assets sit well alongside the company’s other interests in the US, namely the Pilot Mountain tungsten-silver-copper project in Nevada.
Option for Thor to take full-ownership of USL...
The company will provide another technical update in respect of USL’s lithium interests “shortly” and will let the market know whether it plans to exercise its right to buy the remaining shares in the business that it does not already own within the 45-working-day period.
"As investors may expect, there can be no certainty that Thor will exercise this option,” Billing said.
Thor will provide A$50,000 to USL to cover operational costs over the next three months as part of the deal.
USL is an Australian private limited company and its primary asset is the Big Sandy project, which in 2017 averaged 786 parts per million (ppm) of lithium in an exploration programme. Last year the company made an annual loss of US$2,984 and had net assets of US$230,022.
Shares in Thor jumped 16.67% to 1.05p in afternoon trading.