The Australian share market may be sinking on Thursday but the same cannot be said for Patriot Battery Metals Inc. (ASX: PMT) shares.
In morning trade, the ASX 300 lithium stock has burst out of the gates and rocketed 20% to 38 cents.
Why is this ASX 300 lithium stock rocketing?
Investors have been scrambling to buy the company's shares this morning after responding very positively to the release of an announcement after the market close on Wednesday.
According to the release, the lithium developer has entered into a subscription agreement with Germany's largest car manufacturer, Volkswagen.
This will see the company issue and sell approximately 15.5 million shares to Volkswagen at a price of C$4.42 per share for aggregate gross proceeds of approximately C$69 million.
The release notes that the subscription price that has been agreed represents a 65% and 35% premium to the 30-day and 90-day volume weighted average trading price of its TSX listed shares.
Upon closing, Volkswagen will own approximately 9.9% of the ASX 300 lithium stock's issued and outstanding common shares on a pro forma non-diluted basis.
What else?
Patriot Lithium also revealed that it will enter into a binding offtake term sheet with Volkswagen's wholly-owned and vertically integrated battery manufacturer, PowerCo. This will see Patriot supply 100,000 tonnes of spodumene concentrate (SC 5.5 target) per year over a 10-year term.
This offtake is expected to supply PowerCo's cell production activities in Europe and North America. This includes its battery cell factory in St. Thomas, Canada.
It notes that St. Thomas is intended to become PowerCo's largest cell factory with a production capacity of up to 90 GWh. This is enough to produce over one million electric vehicles a year.
Commenting on the investment and offtake agreement, the ASX 300 lithium stock's CEO and managing director, Ken Brinsden, said:
We welcome Volkswagen and PowerCo as our strategic partner. This is a pivotal milestone for Patriot as we bring in a long-term strategic partner who is already a major participant in the European and North American battery supply chain as the first customer of the globally significant Shaakichiuwaanaan Project.
This investment is consistent with our long-term strategy for Patriot to become a global lithium leader and a key supplier of lithium raw materials to the emerging North American and European battery materials supply chains.
Volkswagen Group board member for Technology, Thomas Schmall, adds:
This investment represents a significant milestone in our journey toward a fully electric future. By collaborating with Patriot Battery Metals, we are not only securing key raw materials for cutting-edge sustainable battery technology but also reinforcing our commitment to North America.
