- China’s Yahua International Investment and Development Co takes a 10-per-cent stake in ASX-listed lithium explorer EV Resources (EVR)
- The $3.6-million investment from Yahua comes as part of a memorandum of understanding (MOU) signed between the two businesses in early December
- EVR and Yahua will now continue to negotiate the terms of a more formal business partnership, which may include lithium sale arrangements and a potential joint venture
- Yahua is a subsidiary of Sichuan Yahua Industrial Group, a $7.5-billion Chinese materials company focussed primarily on civil explosives and lithium salt products
- Shares in EV Resources are up 5.36 per cent to 5.9 cents each at 10:47 am AEDT
China’s Yahua International Investment and Development Co has taken a 10-per-cent stake in ASX-listed lithium explorer EV Resources (EVR).
Recently rebranded from Jadar Resources, EVR owns a string of “green technology metals” exploration projects around the world, including lithium projects in Australia and Europe.
Today’s investment from Yahua follows a non-binding memorandum of understanding (MOU) signed between the two businesses in early December.
Yahua has acted on its right under the MOU to buy 80 million EVR shares at 4.5 cents each — a discount of almost 20 per cent to EVR’s last closing price of 5.6 cents per share. The investment gives EVR a $3.6 million cash boost, which the company said it will use to fund exploration and development work at its lithium projects.
Yahua is a subsidiary of Sichuan Yahua Industrial Group, a $7.5-billion Chinese materials company focussed primarily on civil explosives and lithium salt products.
Yahua Group is one of China’s major lithium hydroxide and lithium carbonate producers and last year signed a deal to supply battery-grade lithium hydroxide to electric vehicle giant Tesla.
Under the Yahua MOU signed with EVR, the two companies now have six months to negotiate the terms of a strategic partnership, among which includes the 10-per-cent equity position in EVR taken up by Yahua.
Other terms will include an agreement by EVR to sell 100 per cent of the lithium concentrate it produces to Yahua and the potential establishment of a joint venture for the acquisition and development of lithium projects from the companies.
As such, while the MOU has not yet progressed into a more formal business agreement, the investment by Yahua into EVR may be a positive step for the partnership.
Shares in EV Resources were up 5.36 per cent to 5.9 cents each at 10:07 am AEDT. The company has a $47 million market cap.