We have transcribed the interview between Sarah Lowther of FocusIS and Andrada Mining CEO Anthony Viljoen regarding the recent earn-in deal with SQM on the Lithium Ridge asset.
Sarah Lowther: Andrada Mining is Namibia’s critical raw materials producer with mining and exploration assets. It has announced that one of the world’s largest lithium chemicals producers has entered into a three-stage earning agreement to partner with the company in developing the Lithium Ridge asset.
So, Anthony, the agreement is with Sociedad Química y Minera de Chile SA, which we’ll refer to as SQM from now on. What experience does SQM have in lithium and Namibia?
Anthony Viljoen: Hi, Sarah. Yes, it was a very exciting day for all of us. Partnerships take a while to cement themselves. And we’re very happy that we’ve partnered with SQM on a very substantial deal for ourselves and also for SQM.
So SQM is, as you mentioned, one of the biggest lithium producers globally, and they bring a wealth of expertise in processing lithium. They are not so much a Chilean company but a globally diversified company from a geographical point of view.
This is their first investment into Namibia and one of their first investments into Africa. It shows that they are looking to identify high-quality regions where they can unlock the value of lithium. Namibia is one of the biggest repositories of lithium globally, and we’re very excited about it.
So when will the earning agreement come into effect? And does Andrada have any obligations to fulfil before the agreement is triggered? How confident are you that the Namibian Competition Commission will approve?
It’s a fairly standard requirement for deals in Namibia. We’ve seen it recently with a company called Osino, which is also a mining company that sold out and got a Competition Commission approval. We don’t see this as a very complex transaction.
And it should hopefully be just a straightforward formality—most of the other conditions related to the transaction we have fulfilled already. So, we’re ready to kick off and showcase Namibia as an investment destination of choice.
When does the first earn-in payment come to Andrada?
So that will be upon the Competition Commission’s approval. We would not imagine a distant future, but more importantly, the payment is getting when turning and proving up what we believe will be very exciting deposits for the future.
Okay. So, you will operate the lithium-rich asset during the earning period. So, talk to us about what you believe the asset possesses and the path to commercialisation.
So it’s a unique geological formation, a six-kilometre-long ridge, and all lithium-bearing materials. We found that there’s predominantly spodumene. We have done tests already from a flirtation point of view. And we announced those test results. I think the broader public might have missed it.
But we were getting 80% plus recoveries in the flirtation and up to 7% spodumene mean concentrate, which by global standards is incredibly high and is one of the main reasons why SQM found this as an exciting deposit as we’ve got. So, there is a lot of upside and development potential for exploration. And you know, with a partner like SQM, we can substantially accelerate this development.
In a worst-case scenario, if the agreement with SQM doesn’t happen, is the asset attractive enough to attract other funding partners, and is earning in the preferred route to develop the asset?
Yes, we believe earning is the preferred route. It leaves a lot of upside for incoming and existing investors. We know that there’s a lot of upside there. We’ve done a lot of our work. We’ve done a drilling campaign. We know where the mineralisation is and how it occurs. The biggest unknown here is pretty much just how big the thing is. That’s where the exciting part is going to come in.
So, educated guess just how big this is? How big could it be?
We’ve had a target of over 40 million tonnes. And we’re hoping obviously that we far exceed that.
Okay, so how does this agreement with SQM ultimately benefit shareholder shareholders and Namibian stakeholders?
So look, first and foremost, from a Namibian point of view, we’ve shown our commitment to the country.
We have invested a substantial amount of money and opened up the Erongo Region as a jewel for mineral exploration.
We’re seeing many other companies trying to copy what we’re doing. We are the first mover. We have accelerated our development quite substantially in the country. So we see that as a real bonus for ourselves but giving back to Namibia.
From a partnership point of view, it’s once again a precious and creative partnership for all our stakeholders.
If you look at the value of this asset on our books, it’s at about a $2 million value in our balance sheet.
But this earn-in unlocks a significantly more valuable proposition for our shareholders with little or no dilution at a top company level.
We don’t believe that this had any value in our current market cap. So everything that we’ve produced from this transaction is all upside for our shareholders.
So, this year has been a busy year. You’ve restructured, got funds, and got this burn-in partnership agreement. So what’s next?
Look, Sarah, we’ve always said that our journey’s first part was about lagging a solid foundation with cash flows and value-created partnerships. We’ve shown that we are able to attract significant partnerships.
Bank of Inc. took Orion Capital Partners, Standard Bank, and the Development Bank of Namibia from the financing side. Showing we can now attract a significant shareholder like ISQM and a joint venture partner like ISQM shows the value we create as we grow.
And we’ve always maintained that we are in the next phase of our development as a company. So, the first horizon will be the first phase we call establishing the platform. And now we’ve been there in really exciting times of growth and expansion. And we believe these partnerships will unlock all that value as we hit that exponential growth curve.
