Talga Group and Sociedad Química y Minera de Chile (SQM) have formed a partnership to advance the Aero Lithium Project in northern Sweden.

The collaboration is structured through an earn-in agreement that requires SQM to solely fund up to $19m in exploration spending over seven years for a maximum 70% stake in the project.

Talga managing director Mark Thompson said: “We are delighted to partner with SQM on our Aero lithium project in Sweden, which provides an important chance to build a European lithium supply for the green transition and EU localisation objectives.

“As one of the few potentially large-scale lithium hard rock opportunities in Europe, Aero might be significant to the region’s battery and electric vehicle industry.”

Under the binding agreement, Talga will receive a management fee for each earn-in stage, along with a success fee contingent upon the decision to commence mining operations.

While SQM focuses on lithium, Talga will maintain all rights and responsibilities related to graphite minerals within the Aero site.

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Following the completion of the earn-in period, both parties are expected to contribute to further expenditure proportionate to their ownership stakes or face dilution as per standard joint venture agreements.

SQM’s commitment comes after thorough due diligence including site visits.

The agreement also opens the possibility for the two companies to explore additional lithium projects in Sweden.

Finalisation of the partnership is pending approval from Swedish authorities regarding foreign direct investment.

SQM International Lithium division CEO Mark Fones said: “We are pleased to enter into this agreement, which represents our dedicated efforts to build a global and competitive lithium asset portfolio.

“Expanding into new and promising jurisdictions such as Sweden has been a strategic goal for us, and partnering with Talga, who has demonstrated expertise in the region, further enhances this achievement.”