The race to secure lithium for electric vehicle battery manufacturing is already heating up.
Global automaker Stellantis has announced a strategic investment of approximately $90 million into Canadian junior Argentina Lithium & Energy Corp (TSX-V:LIT, OTCQB:PNXLF), marking a significant milestone for the company.
Stellantis, the parent company of iconic brands like Alfa Romeo, Chrysler, Dodge, and Fiat, will also receive up to 15,000 tonnes of lithium annually over an initial seven-year period.
The investment agreement, effective September 26, 2023, also grants Stellantis the right to exchange Argentina Lithium & Energy shares for up to 19.9% of its own stock on an undiluted basis in the future, under specific conditions.
For Argentina Lithium & Energy and its portfolio of assets in Argentina’s Lithium Triangle, the significance of this investment extends beyond mere financial backing.
Stellantis' extensive presence in the automotive industry, along with its diversified brand portfolio, adds weight to the strategic partnership. The agreement to supply lithium for electric vehicle batteries reflects a forward-thinking approach, addressing the imminent lithium demand surge driven by the rapid transition to electric vehicles.
Nikolaos Cacos, CEO of Argentina Lithium & Energy, told Proactive that the $90 million infusion relieves any funding burden from the company.
“I think we can advance all of our projects over the next three years, right up to the defined resources and prefeasibility studies,” Cacos said.
“To have a partner like Stellantis with us the whole way…validates the projects and the work that we've been doing so far.”
The investment underscores the looming lithium shortage faced by car companies worldwide. As a result, companies are proactively engaging with exploration firms like Argentina Lithium & Energy to secure future lithium supplies for the next three to five years, crucial for integrating into electric vehicle batteries, given the swiftly evolving landscape of electric vehicle adoption.
Moreover, the choice of Argentina as a focal point for lithium projects holds strategic importance, considering that about 60% of the world's lithium is found in the prolific lithium triangle within the country. This places Argentina Lithium & Energy in an advantageous position to meet the increasing global demand for lithium, especially in the electric vehicle sector.
Armed with a new cash infusion, Cacos and the team at Argentina Lithium & Energy remain focused on advancing its projects through drilling to define resources. “Our goal is to be able to double, if not triple, our exploration efforts and see if we can accelerate to a resource stage much sooner than initially anticipated,” Cacos said.
Unsurprisingly, the stock has responded positively to the news. 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, underscoring the confidence investors have in the potential impact of this strategic alliance.
The investment and partnership between Argentina Lithium & Energy and Stellantis represent a transformative shift in the lithium industry, fortifying the financial standing of the junior lithium company and setting the stage for an accelerated exploration journey.