Chariot Resources has strengthened its plans to advance its Nigerian lithium portfolio after signing a binding term sheet with three Chinese partners for a proposed exploration and trial-mining program. The agreement could provide partner-funded drilling and, if results support development, a potential direct shipping ore (DSO) operation.
The partners include C&D (Hainan), a subsidiary of Xiamen C&D (SSE: 600153), Hong Kong ZhongNuo Energy (HKG: 3633), and C&C Minerals. Under the proposed arrangement, the companies will initially assess three potential project areas: Fonlo, Iganna, and Saki. One project will be selected during a 90-day exclusivity period following site reviews and due diligence.
Hong Kong ZhongNuo Energy is expected to fund and conduct at least 1,500 meters of diamond drilling at the selected project. If the drilling delivers satisfactory results, ZhongNuo would also finance and operate potential trial mining activities. C&D would serve as the offtake buyer and make payments in US dollars for qualifying DSO produced under the proposed program.
The first phase of potential trial mining would be contractually limited to a maximum of 240,000 tonnes of DSO. Chariot stressed that this figure represents a contractual ceiling rather than a production forecast. Importantly, the company has not yet established a mineral resource estimate or ore reserve for any of the three project areas.
Under the proposed commercial framework, Chariot and Continental Lithium would establish a special-purpose vehicle, with ownership split at 66.667% and 33.333%, respectively. The vehicle would hold short-term mining and marketing rights and sell qualifying DSO to C&D. Net proceeds would be distributed between the vehicle and ZhongNuo, with ZhongNuo receiving the larger share to reflect its proposed investment and operational responsibilities.
C&D would also provide Chariot with a US$500,000 interest-free prepayment after execution of a definitive agreement. The amount would be recovered through future DSO invoices.
DSO prices would be calculated using a formula linked to the Shanghai Metals Market China battery-grade lithium carbonate price. Shipments would not be mandatory if the calculated DSO price falls below US$150 per dry metric tonne.
The proposed program remains subject to further due diligence, confirmation of mineral titles, completion of Chariot’s Nigerian portfolio acquisition and execution of definitive agreements. Chariot’s portfolio covers four project clusters spanning 257.1 square kilometers across Nigeria’s Oyo and Kwara states.
Product and Chemical Commodity Price Impact
The development could have a moderately positive long-term impact on lithium supply expectations if drilling confirms commercially viable deposits and trial mining progresses. Increased Nigerian DSO availability could diversify supply away from established producers and provide Chinese battery-material manufacturers with an additional feedstock source. However, the immediate market impact should remain limited because no mineral resource or reserve has been defined, drilling has yet to begin, and production is conditional on successful exploration and definitive agreements. If commercial-scale output eventually enters the market, additional lithium ore supply could place mild downward pressure on lithium carbonate and lithium hydroxide prices, particularly during periods of balanced or oversupplied markets.
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