Montero Mining and Exploration Ltd's (CVE:MON) aims to become a lithium producer have been bolstered as it is set to partner with a group that makes products for the Chinese battery market.
The company has inked a non-binding memorandum of understanding with the Jiang Xi Yun Lithium Materials Co Ltd. of China for joint co-operation and development of lithium production in Africa, it said on Monday.
The Chinese firm has an annual production 20,000 tonnes of lithium carbonate and is targeting 40,000 tonnes per year by 2020.
Montero’s president and CEO Tony Harwood said it was "an exciting development for Montero".
"Jiang Xi Yun Lithium is focused on the supply of battery grade lithium products to the electric vehicle market in China.
"Jiang Xi Yun Lithium has already made a significant investment in the development of lithium refining facilities in China and is continuing to expand these with a view to becoming a major supplier of lithium.
"It wishes to supplement its current supply with lithium from Africa which is the focus of our MOU. Jiang Xi is an ideal fit for Montero's intention of becoming a lithium producer."
The partnership under the MOU may take the following forms:
Jiang Xi Yun Lithium will a sign long-term off-take agreement with Montero. Jiang Xi Yun Lithium would provide Montero with beneficiation technology and financing support. Montero will supply Jiang Xi Yun Lithium with long-term lithium production from Africa.
Montero would have the opportunity of investing in Jiang Xi Yun Lithium upstream beneficiation plant, lithium carbonate and lithium hydroxide facilities in China.
Montero currently has three lithium exploration projects in Namibia.
The firm is targeting NI 43-101 compliant resources and the exploration of additional lithium targets in Namibia.