Strike Resources is looking to get a foothold in the burgeoning battery metals space with plans to spin out its lithium and graphite assets into a new IPO to be known as Lithium Energy. Strike will retain a 43 per cent stake in the new company that is slated to raise around $9 million ahead of its listing on the ASX.
The spinoff will give Strike up-side exposure to the battery metals industry leaving it free to focus on its more traditional iron ore assets in Peru and in the Pilbara region of Western Australia where the company is getting tantalisingly close to production.
Lithium Energy will take on Strike’s Solaroz lithium brine project in Argentina and the Burke graphite project in Queensland as it looks to embrace the new world of electric vehicle battery minerals.
Currently Strike holds a 90 per cent interest in Solaroz and a 100 per cent interest in Burke.
Solaroz is made up of 12,000 hectares of tenure within the Salar de Olaroz Basin in the world-renowned “Lithium Triangle” of South America. According to management, the project boasts a strategic location that is prospective for commercial quantities of lithium brine. The same aquifer that supplies lithium rich-brine for ASX-listed Orocobre Limited is believed by the company to extend under Solaroz.
At Burke, graphite occurrences were first identified in the 1970s. Since then, Strike has delineated a mineral resource containing some 6.3 million tonnes grading a serious 16 per cent total graphitic carbon for 1 million tonnes of contained graphite. The mineralisation is wide and commences from surface which according to Strike, makes it conducive to shallow pit mining.
As part of the IPO, Lithium Energy will shortly lodge a Prospectus with ASIC as it seeks to raise $9 million through the issue of 45 million shares at $0.20 per share before costs. Strike will hold 34.4 million shares in the new company representing that will be promoted by Canaccord Genuity as the lead manager and underwriter.
Strike Resources Managing Director, Will Johnson, will assume the role of Executive Chairman of the new company, whilst well known Perth corporate player, Farooq Khan, will act as an Executive Director. Mr Khan is currently the Executive Chairman of Strike. Peter Smith, who has acted as a consultant to Strike on the graphite and lithium projects, will also assume an Executive Director role.
Existing shareholders of Strike can participate in the new venture and will be provided with a personalised Priority Offer Invitation outlining the details of the application process and their entitlement. Those who held shares in Strike as at the 22nd of March 2021 will be able to apply for a minimum 10,000 shares worth $2,000 in Lithium Energy, based on their pro-rata shareholding.
As Strike Resources continues to move its iron ore assets into production, its battery metals projects that were buried in the company’s long list of projects will now move into the spotlight.
With almost every serious lithium company experiencing solid gains in the last year, it looks like battery metals are back in vogue - and possibly here to stay.
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