Vancouver-based junior American Salars (CSE: USLI; US-OTC: USLIF) is acquiring the Lac Simard South lithium project in Quebec, close to Sayona Mining’s (ASX: SVA) lithium projects.
It’s granting Quartier Mineral Ltd. 50,000 shares in return for a 100% interest in about 36.7 sq. km of mineral claims.
Sayona Mining’s lithium projects in the area together host indicated resources of 111 million tonnes grading 1.14% lithium. It also holds the province’s only producing mine, North American Lithium, in a 75%-25% joint venture with Piedmont Lithium (ASX: PLL).
American Salars said it plans for a comprehensive work program to identify and test areas of immediate interest, though its primary focus is Argentina.
“This is the company’s first re-entry point into Quebec with the intention of building a strategic portfolio of hard rock lithium projects to complement our lithium brine assets,” chief executive and director Nick Horsley said in a statement.
Prices for lithium, a crucial component of the batteries that power electric vehicles (EVs), have slumped over 80% since the start of last year on oversupply and weaker-than-expected EV demand.
Yet, analysts and sectorial actors trust that lithium’s long-term outlook will justify efforts. At the very least, they say, it will encourage more merger and acquisition (M&A) interest, as companies look for deeper-pocketed backers to ride out the downturn. As cases in point, they quote Codelco’s purchase of Australia’s Lithium Power International and Rio Tinto’s (NYSE: RIO; LSE: RIO; ASX: RIO) recent US$6.7-billion deal to buy U.S.-based Arcadium Lithium (NYSE: ALTM).
“The company’s long-term belief in a lithium price rebound is steadfast and now is the time to build a multi-jurisdictional lithium company,” Horsley noted.
Shares in the company jumped 25% on the announcement to close Wednesday at 13¢ each, which leaves it with a market capitalization of $3.9 million.
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