Kinunga Mining, a subsidiary of exploration and development company Aterian, has signed a definitive earn-in investment and joint venture (JV) agreement with diversified miner Rio Tinto.
The agreement covers the exploration and development of lithium and by-products at Aterian’s HCK JV project, in Rwanda.
Rio has the option to incur work expenditure of $3-million over a two-year period (Stage 1) to earn an initial 51% interest in the HCK licence.
It will also make cash payments to Aterian, totalling $300 000, to reimburse previous operational expenses incurred by Aterian. An initial payment of $200 000 is due upon completion of satisfactory due diligence by Rio, and an additional payment of $100 000 will be due at the start of Stage 2.
After acquiring a 51% interest in the licence, Rio will have the option to earn an additional 24% interest in the licence by funding additional work expenditures of $4.5-million over a three-year period.
Rio has also agreed to a 2% net smelter return (NSR) over the project, with a $50-million cap that will be due by the future JV between Rio and Kinunga to holders to be notified by Aterian to Rio prior to the NSR agreement being entered into and such holders to be subject to completion of satisfactory due diligence by Rio.
“Under the terms of the agreement, Rio also has an exclusivity option to invest into Aterian’s two other existing Rwandan projects, which will be subject to their own separate agreements.
“A management committee comprising representatives of both Rio and Aterian will be formed to provide financial and operational oversight. Rio will act as the operator for the project,” enthuses Aterian chairperson Charles Bray.
He adds that this is a transformative deal for Aterian and highlights the company’s ability to identify potential world-class deposits in critical minerals such as lithium.
“We have identified 19 separate lithium/caesium/tantalum pegmatite zones across the 2 750 ha project, offering the prospective scale necessary to attract such a major partner as Rio Tinto.”
Bray points out that lithium is a key commodity for global electrification ambitions, as it is the central chemical element of dominant battery chemistries.
Supply chain intelligence provider Benchmark Minerals Intelligence forecasts that this year lithium demand will reach 900 000 t, a jump of 27% year-on-year and further forecast to reach 1.5-million tonnes in 2026, he adds.
“The agreement with Rio delivers material value to Aterian shareholders endorsing Aterian's capital efficient business model as well as demonstrating the potential of Rwanda as a mining jurisdiction. The agreement is subject to conditions, including the addition of lithium as an exploration commodity on the licence, which is expected in due course.
“While we focus on working closely with Rio Tinto and our Rwandan stakeholders to ensure the success of this project, we will also look to replicate the capital efficient exploration and development business model in our other project concessions in Rwanda and Morocco,” he adds.