Talga Group Ltd (ASX: TLG) shares are having a strong finish to the week.
In afternoon trade, the ASX mining stock is up 13.5% to 64.5 cents.
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Why is this ASX mining stock surging?
Investors have been fighting to get hold of the battery materials and technology company's shares following the release of a big announcement.
According to the release, Talga has entered into an earn-in agreement with lithium giant Sociedad Quimica y Minera de Chile S.A. (NYSE: SQM). This agreement is for Talga's Aero Lithium Project in Sweden.
Under the binding agreement, Talga has granted SQM the right to sole fund exploration expenditure of up to US$19 million over the next seven years. This will give the Chilean lithium miner the rights to earn up to a 70% ownership interest in the Aero project. This is subject to Swedish foreign direct investment clearance.
In addition, Talga will also be paid a management fee for each stage of the potential earn-in arrangement, and a success fee if a decision to mine on Aero is made. Talga retains all rights and obligations in relation to graphite minerals within Aero.
The release also notes that SQM has completed extensive due diligence on Aero. This includes site visits, so it clearly likes the look of the project.
And this may not be the only project that the two parties work together on. Under the agreement, they may agree to collaborate on potential new lithium areas and projects in Sweden.
'Aero might be significant'
Talga's managing director, Mark Thompson, notes that the project could be significant for the European market. He commented:
We are delighted to partner with SQM on our Aero lithium project in Sweden, which provides an important chance to build a European lithium supply for the green transition and EU localisation objectives. As one of the few potentially large-scale lithium hard rock opportunities in Europe, Aero might be significant to the region's battery and electric vehicle industry.
This sentiment was echoed by the CEO of the SQM International Lithium division CEO, Mark Fones. He commented:
We are pleased to enter into this agreement, which represents our dedicated efforts to build a global and competitive lithium asset portfolio. Expanding into new and promising jurisdictions, such as Sweden, has been a strategic goal for us, and partnering with Talga, who has demonstrated expertise in the region, further enhances this achievement.
