The Patriot Battery Metals Inc (ASX: PMT) share price is catching the attention of investors on Tuesday.
In the first hour of trade, shares in the hard-rock lithium explorer are up 11.6% to $1.69. The move means Patriot Battery Metals shares are up 125% since the year began.
Here's a look at the catalyst behind today's rally.
What's driving the Patriot Battery Metals share price?
Patriot Battery Metals is making waves on Tuesday after announcing a strategic investment and a memorandum of understanding (MOU) with the world's largest lithium producer — Albemarle Corporation (NYSE: ALB).
According to the release, the two companies have agreed to the private placement of approximately C$109 million (A$123 million) worth of Patriot shares. In doing so, Albemarle will gain 7,128,341 common shares in the minor lithium player at a price of C$15.29 per share.
The placement price represents a 7% premium to the last closing Patriot Battery Metals share price on the TSX Venture Exchange.
Following Albemarle's investment, the company responsible for roughly 16% of global lithium production will own around 4.9% of Patriot. This would make Albemarle the largest shareholder based on currently available information.
The A$123 million raised will accelerate development activities at Patriot's Corvette Lithium Project alongside general corporate purposes. At the end of March 2023, the company held approximately A$64 million in cash and cash equivalents on its balance sheet.
As part of the MOU, Albemarle will assess the potential for downstream lithium hydroxide processing at the Corvette project. In addition, the agreement gives the lithium giant exclusivity with Patriot for nine months with the option to extend.
Albemarle wastes no time
Notably, Albemarle's investment arrived only a day after Patriot claimed to have "the largest lithium pegmatite mineral resources in the Americas". At 109.2 million tonnes at 1.42% Li2O at its Corvette project, the company believes it is the eighth largest in the world.
However, the Patriot Battery Metals share price reacted negatively following the landmark update.
