Armada Metals has finalized a binding term sheet for the acquisition of Midwest Lithium, a firm specializing in the exploration and development of hard rock lithium projects situated in South Dakota, USA. The acquisition is set to strengthen Armada's position in the lithium market, a vital element for the rapidly growing electric vehicle industry. Midwest Lithium's projects are situated in the Black Hills region, spanning five key areas, notably Keystone, Hill City, Phelps, Tin Mountain, and Scott's Rose.

Under the terms of the deal, Midwest shareholders will hold a 50% stake in Armada upon completion, with the consideration shares subject to a voluntary escrow period of 12 months. The transaction's finalization is contingent upon satisfactory due diligence by Armada, alongside the negotiation of formal agreements, regulatory approvals, and shareholder consent from both entities. Additionally, the capital raise continues to be underwritten by Strata Investment Holdings.

To finance exploration and operational expenses, Armada intends to secure a minimum of $5 million in equity capital. Strata Investment Holdings, a significant Armada shareholder, has committed to underwriting A$2.5 million ($1.7 million) of this sum. Capital-raising efforts will be led by Canaccord Genuity and SCP Resource Finance.

In conjunction with the proposed transaction, senior management at Armada may receive options to purchase new shares at a 67% premium to the capital raising price, subject to shareholder approval. These options will constitute 10% of Armada's expanded share capital post-completion.

After the transaction, Armada's board will undergo restructuring, comprising five directors, with three designated by Armada and two by Midwest, reflecting the new strategic direction of the amalgamated entity.

Armada's non-executive chairman, Rick Anthon, remarked, "This deal marks a significant transformation for Armada and its shareholders. While our commitment to projects in Africa remains steadfast, we are poised to acquire drill-ready lithium pegmatite projects in South Dakota, US, with the objective of achieving swift and successful exploration outcomes. This presents an exciting opportunity that leverages our existing in-house expertise in the lithium sector, facilitating the realization of the considerable potential of these highly promising projects and the development of domestic lithium supply in the US."

Midwest, an Australian entity, serves as the holding company for several hard rock lithium projects in the USA. Presently, Midwest possesses, or holds the right to obtain, a 100% stake in 1,098 unpatented lode mining claims spanning around 93km2 in the Black Hills of South Dakota, USA. Additionally, Midwest has options to acquire an additional 6 patented lode mining claims in the area.