Patriot Battery Metals has announced a subscription agreement with Volkswagen, under which Patriot will provide 9.9% of the company’s issued and outstanding common shares to Volkswagen to raise gross proceeds of C$69m ($48m).
The funds from this investment will be directed towards the exploration and development of the Shaakichiuwaanaan Project, including exploration and feasibility studies, and general working capital.
The subscription agreement with Volkswagen involves the issuance of 15,557,500 common shares at C$4.42 each.
This represents a premium of 65% and 35% over the 30-day and 90-day average trading prices, respectively, on the Toronto Stock Exchange (TSX).
Additionally, Patriot will enter a binding offtake agreement with PowerCo, Volkswagen's battery manufacturer, to supply 100,000 tonnes of spodumene concentrate annually over a ten-year period.
Volkswagen and PowerCo will join an advisory committee for the Shaakichiuwaanaan Project.
PowerCo's cell production activities in Europe and North America will benefit from this supply, including its battery cell factory in St. Thomas, Canada.
The factory is expected to become PowerCo's largest, with a production capacity of up to 90 gigawatt-hours, enough for more than one million electric vehicles annually.
The offtake agreement includes a pricing mechanism linked to lithium chemical and spodumene indices, with regular price reviews.
It is subject to conditions such as a final investment decision and necessary approvals by 30 June 2031. A comprehensive offtake agreement will replace the term sheet post-feasibility study.
Volkswagen will also gain rights to participate in future equity raises and assist in acquiring additional shares.
The agreement includes a 24-month standstill and a restriction on transferring shares for two years, except under specific conditions.
Furthermore, a non-binding memorandum of understanding between Patriot and PowerCo will explore collaboration opportunities including environmental, social and governance standards, downstream partnerships and government support.
The strategic investment is pending TSX approval and is expected to close by mid-January 2025.
Macquarie Capital is acting as financial advisor to Patriot, with Davies Ward Phillips & Vineberg representing the company in Canada, and Allens in Australia.
