Argentina Lithium & Energy Corp (TSX-V:LIT, OTCQB:PNXLF) told investors that leading automaker Stellantis is investing the Argentine peso equivalent of US$90 million in Argentina Litio y Energia (ALE) in exchange for shares in the business.
In a statement, the company also announced a lithium offtake agreement, under which ALE will supply up to 15,000 tonnes of lithium a year over an initial seven-year period to Stellantis, which owns brands that include Alfa Romeo, Chrysler, Citroën, Dodge and Fiat, among others.
Under the September 26, 2023, investment agreement, Argentine Lithium said it has also granted Stellantis the right to exchange all of the ALE shares for up to 19.9% of its own stock on an undiluted basis, in the future and subject to certain conditions.
"We are delighted to have Stellantis as a partner in the future development of our lithium projects in Argentina,” Argentina Lithium president and CEO Nikolaos Cacos said in a statement.
“Together, we share a vision to build a sustainable lithium mining operation for the future. We look forward to a strong and successful relationship with Stellantis and we are committed to delivering a sustainable lithium product that will contribute to the electrification of transportation and the protection of our atmosphere."
Among the terms of a shareholders' agreement between the three companies, Argentina Lithium said Stellantis will have the right to nominate one director to ALE’s board for as long as its shareholding remains above 10% and the right of first offer to provide project financing and any other borrowing.
Upon exercise of the Exchange Right, Argentina Lithium said it would enter into an Investor Rights Agreement with Stellanis, giving it the right to nominate a director to its board while its shareholding remains above 10%.
It expects the transaction to close on or about October 4, 2023.
Shares of Argentina Lithium & Energy gained 113% in Toronto trading to close at $0.49 and 127% on OTC markets in New York at $0.36.
--Updates with share price movement--
Contact the author at stephen.gunnion@proactiveinvestors.com