Lithium Co. Experiences Surge in Trading Activity as It Finalizes Deal with Major Auto Manufacturers

The closure of a substantial investment deal involving a prominent lithium exploration company, Argentina Lithium & Energy Corp., by the renowned automaker Stellantis (formerly Chrysler), has been successfully realized, amounting to a significant $90 million.

With the formal announcement of this milestone, Argentina Lithium & Energy Corp. emerged as the most actively traded company on the Toronto Venture Exchange during the period following the announcement. Trading volumes soared, with approximately 1.8 million of the company's shares exchanged by 10 a.m. ET. As a direct consequence of this momentous development, the company's stock witnessed a remarkable increase, surging by an impressive 165%, with share prices climbing from CA$0.23 just last week to reach CA$0.61 on a Friday morning.

Stellantis, an automotive industry heavyweight known for its expansive umbrella of iconic brands, including Chrysler, Alfa Romeo, Citroen, Dodge, Fiat, Jeep, Maserati, and Peugeot, played a pivotal role in this investment initiative. Under the agreement, a subsidiary of Stellantis, Peugeot Citroen Argentina SA, acquired a notable 19.9% equity stake in Argentina Lithium & Energy Corp., effectively taking ownership of a significant portion of the company's issued and outstanding shares. Consequently, Argentina Lithium retained a majority ownership stake of 80.1%.

The investment by Stellantis underscores the growing importance of lithium as a critical component of electric vehicle (EV) batteries, signaling the heightened urgency to secure a steady supply of this valuable resource. The rapid shift towards EV adoption is significantly influencing the automotive industry, and the demand for lithium is expected to grow substantially.

The strategic collaboration of Argentina Lithium & Energy Corp. with Stellantis alleviates funding concerns for the exploration company and positions it to advance its various lithium projects over the next three years. With the financial support from Stellantis, Argentina Lithium & Energy Corp. aims to define resources and conduct pre-feasibility studies, thereby paving the way for commercial production.

The collaboration also extends to a lithium offtake agreement, wherein Stellantis commits to purchasing up to 15,000 tonnes of lithium annually from Argentina Lithium & Energy Corp. This agreement spans a seven-year period, with the potential for extensions under certain conditions. However, the supply obligation is contingent on the commencement of commercial lithium production in one or more of Argentina Lithium & Energy Corp.'s projects, and it also incorporates terms allowing Stellantis the first right of refusal on the sale of lithium products to third parties post-production.

The increased focus on lithium underscores its vital role in the electric vehicle industry, serving as a key component in EV batteries, where it functions as a cathode and electrolyte. The significance of lithium extends beyond EVs, as it is also used to enhance alloys, as a high-temperature lubricant, and as a medication to treat bipolar disorder.