Chariot Resources has entered into a binding term sheet with Chinese partners for a proposed direct shipping ore (DSO) program across its Nigerian lithium portfolio, representing a significant move toward commercializing the company's West African assets. The agreement involves Xiamen C&D subsidiary C&D (Hainan), Hong Kong ZhongNuo Energy, and C&C Minerals, with work focused on one project selected from Chariot's Fonlo, Iganna, and Saki project areas. Under the proposed structure, ZhongNuo will fund and undertake a minimum 1,500-metre diamond drilling program and, subject to satisfactory results, fund and operate potential trial mining operations.
C&D will serve as the offtake buyer and US dollar payer for qualifying DSO. The parties have established a 90-day exclusivity period to complete site reviews, select one project, and negotiate a definitive agreement. C&D has paid Chariot a refundable US$100,000 exclusivity fee to secure this arrangement.
Potential phase one trial mining operations are capped at a maximum 240,000 tonnes of DSO, though Chariot emphasizes this represents a contractual maximum rather than a production target. The company notes that no mineral resource estimate or ore reserve has been estimated for any of the project areas, reflecting the early-stage nature of the initiative. The commercial structure involves establishing a special-purpose vehicle owned 66.667 percent by Chariot and 33.333 percent by Continental Lithium.
This vehicle would hold short-term mining and marketing rights, sell qualifying DSO to C&D, and receive sale proceeds. Net DSO sale proceeds after applicable costs would be allocated proportionally between the special-purpose vehicle and ZhongNuo, with the larger share payable to ZhongNuo to reflect its proposed funding and operational role. C&D will provide Chariot with a US$500,000 interest-free prepayment upon execution of the definitive agreement, which will be amortised against future DSO invoices.
The pricing mechanism represents a key innovation in the agreement. DSO pricing will be determined under a formula linked to the Shanghai Metals Market (SMM) China battery-grade lithium carbonate spot price. Critically, no party would be required to mine, sell, or deliver a shipment where the calculated DSO price falls below US$150 per dry metric tonne, providing a price floor protection mechanism.
Chariot Executive Chair and Managing Director Shanthar Pathmanathan characterized the term sheet as providing a structured pathway to evaluate one project from the Nigerian portfolio with proposed partner funding. "The phased structure is important: the parties must first complete site reviews, diligence and drilling, and the commercial program would proceed only if definitive agreements are executed and all conditions are satisfied," Pathmanathan stated. Substantive arrangements will take effect following execution of a definitive agreement and satisfaction of conditions precedent, including due diligence, completion of the Nigerian portfolio acquisition announced in July 2025, and confirmation of mineral titles.
The parties must select one project during the exclusivity period, negotiate the definitive agreement, and complete the acquisition prior to commencement of drilling. According to Shanghai Metals Market analysis, the key highlight of this DSO term sheet is the pricing mechanism linked to SMM's battery-grade lithium carbonate spot price, with the US$150-per-tonne floor creating a two-way protection mechanism. C&D's involvement reflects its established presence in the mining sector and represents a deepening of its upstream operations.
The company is using the SMM price as a mechanism to more tightly bind pricing power with the domestic Chinese market. However, the project remains at an early stage with no published resource estimate, and final execution hinges on the 90-day due diligence and mineral title confirmation process. Chariot Resources is an explorer focused on the discovery and development of lithium opportunities in Nigeria, with its portfolio consisting of four project clusters covering 257.1 square kilometres across Oyo and Kwara states.
Source: Shanghai Metals Market (SMM), mining.com
Source: news.metal.com