06:55 AM EST, 12/18/2024 (MT Newswires) -- Patriot Battery Metals ( PMETF ) on Wednesday said it signed a subscription agreement with German car maker Volkswagen in which Patriot will issue about 15.6 million common shares at $4.42 apiece for gross proceeds of $69 million.

The price is a 65% and 35% premium to the 30-day and 90-day volume weighted average trading price of the common shares on the TSX for the period ending Dec. 17.

At deal closing, Volkswagen will own about 9.9% of Patriot's common shares and will be granted certain rights under an investor rights agreement.

Proceeds from the investment will be used for exploration, development and completion of a feasibility study on the Shaakichiuwaanaan project, as well as for general and working capital purposes.

The deal is subject to TSX approval and other customary closing conditions and is expected to close on or before mid-January 2025.

As part of the deal, Patriot will enter into a binding offtake term sheet with Volkswagen's battery manufacturer PowerCo for Patriot to supply 100,000 tonnes of spodumene concentrate per year over a 10-year term, with an option to extend for another five years.

The offtake is expected to supply PowerCo's cell production activities in Europe and North America, including its battery cell factory in St. Thomas, Canada, intended to be PowerCo's largest with a production capacity of up to 90 gigawatt-hours.

The offtake is subject to customary terms and conditions, including a final investment decision, all necessary authorizations and approvals and successful commissioning of Stage 1 of the Shaakichiuwaanaan project by 30 June 2031.

Patriot and PowerCo have also entered into a non-binding and non-exclusive memorandum of understanding to be effective at deal closing for a 24-month term.

Under the MOU, the parties have agreed to jointly explore opportunities for collaboration on shared strategic objectives relating to the Shaakichiuwaanaan Project.