Bacanora Lithium PLC (LON:BCN) has entered a conditional sale and purchase agreement with Erris Resources PLC (LON:ERIS) for its 50% interest in Deutsche Lithium (DL), the owner of the Zinnwald lithium project in Germany.
Under the agreement, Bacanora said it will sell its stake in DL plus €1.35mln (£1.23mln) in return for 90.6mln new shares in Erris, together with a net profit royalty. Following the transaction, Bacanora said it will own a 44.3% stake in Erris.
READ: Bacanora Lithium sells Zinnwald stake to Erris Resources
The company noted that the agreement will grant it a royalty of 2% of net profits earned by Erris which relate to its 50% shareholding in DL and its sale of lithium products or minerals, particularly in relation to Zinnwald, for an initial 40-year term unless Erris extinguishes the agreement by making a one-off payment of €2mln.
The new agreement follows the proposed sale announcement from Bacanora for its interest in the Zinnwald project late last month, with chief executive Peter Secker saying at the time that the sale will help accelerate the development of the project.