Patriot Battery Metals (TSX: PMET) has secured a major investment from Volkswagen, with the automaker set to take a 9.9% interest in the lithium explorer.
The arrangement will see Volkswagen acquire 15.6 million common shares of Patriot at a price of $4.42 per share, which represents a 65% premium to the 30 day volume weighted average price of the issuer, and a 67% premium to yesterdays close. The financing will see Volkswagen invest a total of $69 million into the issuer.
As part of the transaction, Patriot is also to enter into an offtake agreement with Volkswagen, which will see the automakers battery manufacturing subsidiary, PowerCo, obtain the right to 100,000 tonnes of spodumene concentrate (SC 5.5) per year for a ten year term. An optional five year extension is also in play, which can be exercised upon mutual agreement of both parties.
Pricing under the offtake agreement is said to be linked to reported indices for lithium and spodumene, with certain undisclosed adjustments to be included to reflect the strategic investment. The offtake is also subject to all approvals and commissioning being completed at the Shaakichiuwaanaan Project by June 30, 2031.
The offtake is expected to support cell production in both Europe and North America, including the battery cell factory in St Thomas, Canada.
As part of the investment, Volkswagen will have the right to participate in future equity raises, and has agreed to a 24 month lock-up on its shares. The automaker also has the right to act as a cornerstone investor for project FID funding in return for additional offtake, upon the issuance of a feasibility study.
Finally, Patriot and PowerCo have entered into a memorandum of understanding, which will see the two parties agree to explore opportunities for collaboration on strategic objectives related to Patriot’s project.
“The initial investment by PowerCo and Volkswagen validates the world-class nature of the Shaakichiuwaanaan Project and the Offtake cements the Company’s future as a major lithium raw materials supplier of choice in their EV supply chain,” commented Ken Brinsden, CEO of Patriot Battery Metals.
Patriot Battery Metals last traded at $2.65 on the TSX.
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