Atlantic Lithium Ltd (AIM:ALL, OTCQX:ALLIF, ASX:A11) has welcomed Sayona Mining as a new prospective funding partner for the company’s flagship Ewoyya Lithium project in Ghana.
Aussie-listed Sayona is expected to assume funding obligations for Ewoyya following its proposed merger with Atlantic's current funding partner Piedmont Lithium (ASX:PLL, OTC:PLLTL).
The merged entity will be required to sole fund US$70 million towards the development expenditure for Ewoyya, with any cost overruns shared equally between it and Atlantic.
Under terms of the funding agreements, any cost overruns will be shared equally between Atlantic Lithium and MergeCo.
The newly merged partner will have the right to an offtake agreement for 50% of the project's spodumene concentrate production at market rates.
“The company believes that the proposed merger will not only significantly de-risk the funding of the project towards production, but also extend the project's exposure globally, notably in North America and Australia, including to potential offtakers,” Atlantic said in a statement.
Atlantic Lithium’s executive chairman Neil Herbert added: "Following our discussions with Sayona CEO and MD Lucas Dow and his team, we wholeheartedly welcome the commitment from MergeCo towards the continued funding and development of the Company's Ewoyaa Lithium Project towards production.
"With lithium prices expected to remain subdued over the short-medium term, we believe that Ewoyaa's low-cost profile makes it a highly attractive asset in MergeCo's enlarged portfolio.
“The proposed merger not only emphasises the underlying belief in lithium's role in the global energy transition but also significantly de-risks the funding of the project, at an important juncture in its lifecycle.
"We look forward to working closely with the MergeCo team to drive Ewoyaa forward to become Ghana's first lithium mine."
The merger is subject to shareholder approval.