What happened
Monday was an ideal day to be a shareholder of American Lithium (AMLI 0.91%). The mining company's share price rocketed more than 16% higher on news that it closed an acquisition. By contrast, the S&P 500 index could only muster a 0.9% gain on the day.
So what
Before market open, American Lithium disclosed that it had completed its investment in peer Surge Battery Metals. With its 5.36 million Canadian dollar ($4.02 million) investment, the company now holds roughly 9.7% in Surge.
It could push that number higher. In return for its investment, American Lithium received 13.4 million units of Surge. These comprise one share of common stock and a single share purchase warrant. The warrants allow for the purchase of common stock at a price of CA$0.55 ($0.41) per share and will be exercisable for a period of three years.
With its stake, American Lithium said, it has the right to fill a seat on Surge's board of directors. Wasting no time in doing so, it nominated its executive vice president Ted O'Connor for the position; this was accepted immediately.
Finally, American Lithium has signed an advisory agreement with Surge. Under the terms of this arrangement, the company will supply technical advice on Surge's activities in a Nevada lithium mine.
Now what
American Lithium is clearly enthusiastic about its deepened involvement in Surge, and investors are buying what the company is selling. CEO Simon Clarke was quoted as saying that its tie-up with Surge "will enable the continued exploration and development of the Nevada North Lithium Project, a claystone project which we believe is highly prospective with the potential to be a large-scale, high-grade deposit."