Canadian based mineral exploration company Chimata Gold Corp (CGC) has emerged as Government’s partner in the Kamativi Mine lithium projected expected to generate $1,4 billion in eight years.
CGC announced yesterday that it signed a binding letter of intent with Mauritian registered Zimbabwe Lithium Company (ZLC) Limited whose wholly owned subsidiary has recently been granted exclusive development rights for the Kamativi Lithium Tailings Deposit in Zimbabwe.
The deal is expected to unlock Zimbabwe’s lithium potential amid growing interest on the battery making mineral across the globe.
Zimbabwe’s lithium production has averaged 1 000 tonnes a year since 2012, according to Statistics, to become the fifth largest producer after Australia, the world’s largest producer extracted 18 700 tonnes of the commodity last year followed by Chile, Argentina and China.
In Kamativi, lithium occurs in a massive outcrop estimated to hold 3,5 million tonnes. Zimbabwe has two more lithium mining projects, Zulu Project and the Arcadia Project are at different levels of development. The projects are expected to grow Zimbabwe’s share of a $22,8 billion global market as of 2016 and likely to grow to$93,1 billion by 2025.
In terms of the letter of intent, Chimata will subscribe to the share capital of ZLC for an initial subscription of 19 percent of ZLC’s share capital in exchange for the allocation by Chimata of an amount of shares representing 19 percent of its then issued and outstanding share capital to ZLC, such amount being calculated post-closing of the Concurrent Financing with right to further acquire the remaining issued and outstanding share capital of ZLC upon the fulfilling of certain terms and conditions as set out in the letter.
ZLC will then become a subsidiary of CGC.
ZLC will be focused on developing lithium mining properties and assets located in Zimbabwe held by ZLC and related companies wholly owned by ZLC’s principals, one of which having recently signed a joint-venture agreement with the Zimbabwe Mining Development Corporation (ZDMC) with respect to the grant of exclusive development rights for the Kamativi lithium tailings deposit at the Kamativi Tin mine, Matabeleland North Province, Zimbabwe.
This tailings stockpile has been surveyed to give an estimated 23,168,000 metric tonnes of historical tailings material on surface.
The transaction will be finalized after among other things completion of a satisfactory due diligence of the assets by CGC and the entering into a definitive agreement ZLG and CGC.
CGC is expected to complete a non-brokered private placement of up to two million Canadian dollars by the issuance of units of CGC at a price of $0,15 per unit, each unit being comprised of one common share in the share capital of CGC and one half common share purchase warrants each full warrant entitling its holder to purchase one common share in the share capital of CGC at a price of $0,25 per common share for a period of 12 months.
“A finder’s fee of “6 percent may be payable in cash on the concurrent financing to registered market dealers,” said the Canadian firm.
Production of a technical report by ZGL prepared in accordance with Standards of Disclosure for Mineral Projects.
“As of this date, CGC has an exclusive right to complete the transaction with ZGC. The Company will provide further updates regarding the contemplated transaction within 30 days following the issuance of this press release.”
CGC said, “We look forward to working with the Zimbabwe Government, ZMDC and our operating partners at ZGC in building a rapidly emerging capital efficient lithium supplier to the world”.