Major automakers continue to work to secure their supply chains for electric vehicles, with Stellantis N.V. (NYSE: STLA) this afternoon disclosing that it has entered into a definitive agreement with Argentina Lithium & Energy (TSXV: LIT) for a major investment.
The arrangement will see Stellantis, via its Peugeot Citroen Argentina S.A. subsidiary, invest the equivalent of US$90 million into a subsidiary of Argentina Lithium. The investment will see Stellantis obtain shares of the subsidiary, which can be exchanged for up to a 19.9% stake in Argentina Lithium.
Certain top-up rights have also been put into place, while Stellantis will also have the right to observe any board meetings conducted by Argentina Lithium, so long as it maintains a 10% interest or more in the company. Stellantis, upon exchanging its shares for a stake in Argentina Lithium, will have the right to nominate one director to the board as well.
In connection with the investment, the two parties have entered into a lithium offtake agreement that will give Stellantis the right to purchase up to 15,000 tonnes per year of lithium produced by Argentina Lithium over an initial seven year term. Lithium sold under the agreement will be priced based on agreed market-based price formula at the time of shipment. The supply agreement is conditional upon the start of commercial production at one or more of Argentina Lithium’s projects.
Proceeds from the investment are slated to be used for the development of the lithium projects held within the subsidiary, as well as for general corporate purposes.
The investment is slated to close October 4, 2023.
Argentina Lithium last traded at $0.23 on the TSX Venture with a market capitalization of $30.0 million.
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