XTC Lithium’s Focus Shift Risks Market Uncertainty Amid Asset Divestments

Strategic Partnership in Argentina

XTC Lithium Limited (ASX: XTC) has taken a decisive step to advance its lithium ambitions by signing a non-binding Letter of Intent (LOI) with American Battery Materials, Inc. (ABM), a US-based lithium resource developer. This agreement outlines the framework for ABM to acquire up to a 50% interest in XTC’s Carachi Lithium Project located in Argentina’s prolific Lithium Triangle.

The Carachi Project, held through XTC’s Argentine subsidiary, covers extensive exploration properties in Catamarca Province, a region renowned for its lithium brine deposits critical to electric vehicle and renewable energy battery supply chains. Under the LOI, ABM is set to make an initial US$3.5 million investment within three months to secure a 10% stake, with options to increase its holding to 50% over the next 30 months based on a dynamic valuation model tied to lithium prices, resource size, and market factors.

Focused Asset Portfolio and Capital Strategy

In parallel with this partnership, XTC has divested its non-core Southern Cross gold tenements in Western Australia for $1 million, with payments structured over three instalments. This divestment aligns with the company’s strategy to concentrate resources and management attention on the Carachi Lithium Project. Additionally, XTC has relinquished its 22.5% interest in South Korean mineral tenements, further streamlining its portfolio.

The funds from ABM’s initial investment will be directed towards corporate commitments, working capital, and the commencement of a drilling program at Carachi, signaling a transition from exploration to more active development phases. The company is also engaged in discussions with other potential partners familiar with Argentine mining conditions, indicating a proactive approach to securing operational support and additional capital.

Corporate Governance and Market Position

Board dynamics have shifted with the resignation of non-executive directors Carlos and Carolina Arecco, reflecting changes in the company’s governance as it pivots towards its lithium focus. Chairman John Featherby remains at the helm as XTC works towards reinstatement to ASX trading, a key milestone for restoring market confidence and liquidity.

Financially, the company reported operating cash outflows consistent with exploration activities, offset partially by proceeds from asset sales and financing activities. With cash reserves modest at $32,000 but supplemented by $1.35 million in unused financing facilities, XTC is actively pursuing capital raising efforts to sustain operations and advance its projects.

Positioning in the Lithium Triangle

The Carachi Lithium Project’s location in the Lithium Triangle situates XTC among established players such as POSCO, Livent Corporation, Allkem Resources, and Lake Resources, all of whom are advancing lithium extraction in this globally strategic region. The proximity to these operations underscores the potential value and strategic importance of Carachi as global demand for lithium intensifies.

As the company moves forward, the successful negotiation of a definitive agreement with ABM and securing regulatory approvals will be critical next steps. The planned drilling program will provide essential data to validate resource estimates and attract further investment.