Alliance Mineral Assets signs lithium rights JV with Lithco

Australian miner Alliance Mineral Assets has entered into a lithium rights joint-venture (JV) agreement with Lithco, a unit of Australia-listed Tawana Resources, furthering a farm-in agreement that both parties signed in February.

The latest agreement outlines the terms and conditions in which the JV will conduct the exploration and, if warranted, mining operations of lithium rights at the Bald Hill tenements in Western Australia.

It will apply after Lithco has spent the expenditure commitment of A$7.5 million (S$7.9 million) that it promised in the farm-in agreement. But if both parties were to discover material bearing lithium suited for economic exploitation, they will negotiate and execute a separate mining JV agreement.

In addition to the above, Alliance Mineral Assets said that it has engaged Canaccord Genuity (Australia) to provide corporate advisory services, in light of high interest from both capital markets and potential offtake partners to be involved in financing the development of the mining project.

Shares in Alliance Mineral Assets have risen so much - more than trebling year-to-date - that several brokerages have restricted trading of the stock.

That could have caused a recent selloff - when the stock was hovering around 40 Singapore cents - as investors could not trade the stock freely, said the firm's CEO Tjandra Pramoko.

To demonstrate the management's belief in the long-term value and potential of the company, Mr Pramoko on March 31 bought 300,000 shares at 30.5 Singapore cents each on average on the open market.

"We remain confident in the prospects of the company as (it) remains on track to produce lithium by the end of the year, and as demand for lithium remains robust we believe we are in the right industry," he said in a statement on April 3.

Alliance Mineral has said that it expects its resource estimate to be released in early April. With it, the firm will be able to complete its feasibility study for the production of lithium and tantalum, and award the engineering, procurement and construction (EPC) contract for mine infrastructure. It can then also finalise offtake agreements with potential partners that it is already in discussions with.

Shares in the company closed at 33.5 Singapore cents on Tuesday, down 1.5 cents. Close to 21 million shares changed hands, making the counter one of the most active on the exchange.

Andrea Soh

12 April 2017