Andrada Mining, SQM partner for Lithium Ridge development in Namibia

Andrada Mining and lithium producer SQM have inked a partnership to develop Lithium Ridge asset in Namibia. The partnership is structured as a three-stage earn-in agreement, pending approval from the Namibian Competition Commission.

Lithium Ridge, spanning about 3,300 hectares, is situated in Namibia’s Erongo region, approximately 35 kilometers from Andrada’s Uis mine, which began producing lithium concentrate last year. Under this agreement, SQM will finance exploration and development activities to potentially acquire a 50% stake in Grace Simba Investments (GSI), the Andrada subsidiary holding the Lithium Ridge license.

Terms

The key terms include an initial payment of US$2 million from SQM to Andrada, paid in two tranches, an option for SQM to invest up to US$20 million over three stages. The first phase will see SQM invests US$7 million in exploration over 18 months, earning a 30% stake in GSI. During the second phase, SQM can secure an additional 10% stake (totaling 40%) by investing another US$13 million over 24 months.

The third phase on the other hand, if Lithium Ridge advances to a definitive feasibility study or incurs US$40 million in development costs, SQM could earn up to a 50% interest in GSI. Andrada will operate and manage the Lithium Ridge project during the earn-in period, with guidance from a joint development committee consisting of members from both companies. Additionally, there is a contingent success fee where, if Andrada declares a mineral resource exceeding 40 million metric tons during the third phase, SQM will pay a sum based on the lithium oxide content of the resource.

This partnership is significant for both companies and Namibia’s mining industry, as it could place the country at the forefront of African lithium development. Exploration at Lithium Ridge has identified mineralization along a 6-kilometer strike length, with grades reaching up to 2.13% lithium oxide.