Greenwing Resources jumps 75% on the back of a pivotal deal with NIO

The ASX may have lost 2% today, but that did not stop Greenwing Resources (ASX:GW1) gaining more than 75% this morning. The catalyst was a $12m investment deal with NYSE-listed EV company NIO that will see it obtain a 12.16% stake and a seat on the board.

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Greenwing Resources becomes the latest lithium play to win a new partner

Lithium is an exciting commodity to be in right now because of the growing demand for electric vehicles. But as good as it is to have a decent project, you need partners to sell the finished product and not all companies have one.

Liontown Resources (ASX: LTR), Piedmont Lithium (ASX: PLL) and Core Lithium (ASX: CXO) all have offtakes deals with industry leader Tesla. 

Chinese EV firm NIO wants to play ball

Greenwing Resources now has a deal with US$29bn EV company NIO. NIO has direct rights to take 20-40% of production from Greenwing’s San Jorge project and the right to match any offer to purchase the remaining offtake share.

Australian investors could be forgiven for not knowing about NIO. While it is no Tesla, it is not an industry nobody either, selling 20,059 vehicles in the June quarter. 

And a new investor

The deal between Greenwing Resources and NIO did not stop at offtake arrangements. NIO will pay $12m for a 12.16% stake in the company and a call option to acquire 20-40% of the issued capital of Andes Litio, a company with option rights over San Jorge. Greenwing has promised at least 80% of the proceeds will be used for the project. 

The deal is subject to a number of terms, including the issuing of a JORC report by the end of 2023. But if it follows through, then this will be a company-making deal for Greenwing Resources, so far as getting its project off the ground is concerned. 

But on a day when the ASX 200 is down by 2%, investors in Greenwing Resources are probably just happy that their company is one of today’s biggest winners.

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