The Sayona Mining Ltd (ASX: SYA) share price has returned from its trading halt and is rocketing higher on Monday.
At the time of writing, the emerging lithium miner's shares are up 100% to 2.8 cents.
Why is the Sayona Mining share price rocketing higher?
Investors have been fighting to get hold of the company's shares this morning after it announced a deal with fellow lithium miner Piedmont Lithium Ltd (ASX: PLL).
According to the release, the two companies have signed a strategic partnership that will accelerate the development of Sayona's lithium projects in Québec, Canada.
Under the agreements, Piedmont will acquire an initial 9.9% equity interest in Sayona and two unsecured convertible notes for US$7 million. The latter would see Piedmont Lithium issued a further 10% equity interest in Sayona upon conversion.
In addition to this, Piedmont will invest approximately US$5 million in cash for a 25% stake in Sayona Québec.
Sayona's management notes that the funding will help advance its growth plans in the province, including its flagship Authier Lithium Project, the emerging Tansim Lithium Project, and the creation of a lithium hub in Québec's Abitibi region.
Offtake agreement.
The two companies have also agreed a binding offtake arrangement under which Piedmont Lithium will acquire up to 60,000 tonne per annum of spodumene concentrate or 50% of Sayona Québec's production, whichever is greater.
The supply agreement is for Sayona Québec's life‐of‐mine operations and is based on market pricing, with a minimum price of US$500 per tonne and a maximum price of US$900 per tonne on a delivered basis to Piedmont's planned lithium hydroxide plant in North Carolina.
However, the supply agreement is conditional upon Piedmont and Sayona agreeing to a start date for spodumene concentrate deliveries between July 2023 and July 2024, based on the development schedules of both parties.
Piedmont Lithium's President and CEO, Keith D. Phillips, commented: "Piedmont is building a world‐class spodumene‐to‐hydroxide business in North Carolina, and we are now very pleased to be partnering with Sayona to advance a similar business in Québec."
"Québec is destined to become one of the world's major lithium hydroxide production centres given its abundant mineral resources, low‐cost, sustainable hydroelectric power, proximity to major U.S. and European electric vehicle markets, and pro‐electrification stance of provincial leaders."
"This is a very exciting step for Piedmont, and we look forward to supporting Sayona's team as they drive day‐to‐day activities in Québec, while Piedmont's team focuses on its core interests in North Carolina," he concluded.
Sayona's Managing Director, Brett Lynch, echoed this sentiment.
He said: "Piedmont has shown tremendous vision in creating a base in North Carolina, a centre of lithium hydroxide production in the United States, and has secured significant supply agreements with leading EV makers."
"I am delighted to welcome Piedmont as a strategic partner. This agreement will underwrite the future of our Authier project, expedite our growth plans in Québec including our bid for North American Lithium, and enhance access to the U.S. market and investors," Mr Lynch added.
