Bradda Head Lithium Ltd (AIM:BHL) said it entered into a conditional royalty agreement with Lithium Royalty Corp (LRC) over Bradda’s sedimentary lithium claims in Central Arizona.
The agreement is subject to certain conditions, including satisfactory due diligence and a site visit from LRC.
The total value of the 2% royalty with LRC is US$8mln (£6mln), which will be paid at three predetermined milestones, said AIM-listed Bradda.
LRC will also invest US$2mln through a private placement. The proceeds from the placement have no limitations and can be used to develop Bradda's pegmatite and brine projects.
Funds from the royalty will be used to develop Bradda's 47km2 of sedimentary claims in Arizona.
“The importance of this investment cannot be understated for Bradda Head, this will allow us to develop our sedimentary claims to an initial technical study level and progress our metallurgical testwork without a need for further funds from the market for our clay assets,” said Bradda chief executive Charles FitzRoy.
“This is another significant step towards our end-goal of becoming a battery-grade lithium provider to the lithium-hungry US market."
Bradda expects the due diligence to be completed by December 3 and the royalty agreement to be signed by December 21.