Rio Tinto inks earn-in deal for lithium project in Rwanda

Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) is making its first foray into Rwanda by signing an earn-in investment and joint-venture agreement with African-focused Aterian (LSE: ATN) to develop lithium and byproducts at the junior’s HCK lithium licence.

The world’s second largest miner has the option to invest up to US$7.5 million in two stages to earn up to a 75% interest in the licence, which covers 27.5 sq. km in southern Rwanda.

Rio has agreed to make cash payments to Aterian totalling US$300,000 to reimburse it for previous operational expenses incurred.

“This is a transformative deal for Aterian and highlights our ability to identify potential world-class deposits in critical minerals such as lithium,” chairman Charles Bray said in a statement.  

The company said an initial US$200,000 payment is due on completion of satisfactory due diligence by Rio Tinto, with an additional US$100,000 payment due at the start of Stage 2.

In return, Aterian has granted Rio Tinto a 2% net smelter return (NSR) over the project capped at US$50 million,. The investment will be due by a future joint venture between Rio Tinto and Kinunga Mining, which holds the licence for the HCK project. Aterian holds a 70% interest in Kinunga Mining.

The deal also grants Rio Tinto an exclusivity option to invest in Aterian’s other two projects in Rwanda.

Aterian has identified 19 separate lithium/caesium/tantalum pegmatite zones across the project, which is well connected to local infrastructure.

Shares in the critical and strategic metals junior jumped more than 40% on the news in early trading in London to 1.49p, but were down mid-afternoon to 1.04p, leaving the company with a market capitalization of £9.95 million.