Atlas Lithium raises US$20M from investors led by former Allkem chairman

Brazil-focused Atlas Lithium (NASDAQ: ATLX) has landed US$20 million from a group of lithium investors led by Martin Rowley, the former chairman of lithium powerhouse Allkem (TSX: AKE; ASX: AKE), to advance its flagship Neves project in Minas Gerais state.

Atlas, which has completed nearly 60,000 metres of drilling at Neves, plans to release an initial resource estimate plus preliminary economic assessment in next year’s first quarter. 

The company holds 240 sq. km in Brazil’s Lithium Valley area, near Sigma Lithium‘s (TSXV: SGML) Grota do Cirilo mine, which began production earlier this year.

The investment comes in the form of a three-year convertible note that carries a coupon of 6.5% per year. It is convertible to Atlas’ common stock at a price of US$28.225 per share, a 25% premium to the volume-weighted average price for the three trading days prior to the investment agreement.

“In the current environment where U.S. Treasuries yield close to 5%, the fact that Atlas Lithium was able to raise new capital at 6.5% is a strong outcome and an indication of investor interest. In addition, the conversion price is at a substantial 25% upside to the current stock price,” said Marc Fogassa, chairman and CEO of Atlas Lithium, in a press release on Wednesday.

However, the biggest benefit, Fogassa says, is to have the expertise of astute lithium investors including Rowley, which aligned with the company’s strategy.

In 1996, Rowley co-founded First Quantum Minerals (TSX: FM), one of the largest copper companies in the world. In 2009, he recognized the potential of lithium and became chairman of Lithium One, and later chairman of Galaxy Resources after the two companies merged.

In the following years, Rowley led significant growth in Galaxy, ultimately resulting in its merger with Orocobre in 2021, creating Allkem. He retired as chairman of Allkem last November.

“Atlas Lithium has an excellent asset base and a dedicated and hard-working team complemented by a strong collaborative culture,” Rowley stated in the news release.

Earlier this year, Atlas also raised US$20 million by selling a 3% gross overriding revenue (GOR) royalty on Das Neves, which covers four of its mining claims, to Canada’s Lithium Royalty Corp. (TSX: LIRC). This was the biggest lithium royalty deal in Brazil to date.

“The Das Neves project exhibits high-grade coarse-grain spodumene ore that should lend itself to simple processing. Brazil is quickly developing into an important and environmentally friendly lithium jurisdiction, and we are excited to support Atlas Lithium on its accelerated path to production,” Lithium Royalty’s president and CEO said at the time.

Shares of Atlas Lithium rose 5.5% on the NASDAQ by 12:30 p.m. EDT. The Florida-based company has a market capitalization of US$258.4 million.