Neo Lithium (TSXV: NLC; US-OTC: NTTHF) announced it has closed a strategic equity investment by EV battery maker Contemporary Amperex Technology Co. Ltd (CATL).
CATL, which supplies lithium iron phosphate batteries to Tesla, announced earlier this year that it will make a sizeable investment in Neo Lithium and help the company develop its lithium projects in South America.
As previously planned, CATL has subscribed for over 10.21 million Neo Lithium common shares at a price of $0.84 per share for gross proceeds to Neo Lithium of $8.58 million. These shares represent approximately 8% of Neo Lithium's issued and outstanding shares, making CATL the company's third-largest shareholder.
"The closing of the CATL strategic investment validates the quality of our 3Q project and the capabilities of our management team. It further strengthens our long-term commitment and focus on our project as we work together with CATL to bring 3Q into full development by building a comprehensive financing plan," Neo Lithium's chairman Constantine Karayannopoulos stated in a news release.
With the proceeds of the equity investment from CATL, the company now holds a net cash position of approximately $35 million.
The 3Q project is located in Argentina's Catamarca province, the largest lithium producing area in the nation. The property covers approximately 35,000 hectares including a salar complex of approximately 16,000 hectares.
According to a 2019 preliminary feasibility study, the project contains an estimated 1.3 million tonnes of lithium carbonate equivalent (LCE) in proven and probable reserves. The PFS also outlined an after-tax net present value of over US$1.1 billion and an IRR of 50%.
In March, Neo Lithium announced that it has produced battery-grade lithium carbonate at its pilot plant in Fiambal??, the closest population centre to the project.
This article first appeared in MINING.com, part of Glacier Resource Innovation Group.