Shanghai (ZXZC)- Blue Northstar Limited, a wholly-owned subsidiary of NIO Inc., plans to invest in Greenwing Resources ("Greenwing"), an Australia-based minerals exploration company, according to a press release issued by Greenwing on Sept. 26.

The transaction will enable Greenwing to speed up its exploration program at San Jorge Lithium Project in Catamarca province, Argentina and align NIO as the company's potential joint venture and offtake partner.

Photo credit: NIO

Under the agreement, NIO should pay A$12 million (US$7.773 million) to subscribe for 21,818,182 Greenwing shares at a deemed issue price of A$0.55 per share (US$0.36) (called “Placement” for short). Upon completion of the Placement, NIO will hold a roughly 12.16% stake in Greenwing, on a fully-diluted basis as of the data of issuance, and will gain a seat on the board of the Australian company.

At least 80% of the proceeds from the Placement will be used for the San Jorge Lithium Project, with the remaining amounts to be used for general working capital purposes and other businesses.

Meanwhile, the transaction will give NIO a call option to acquire between 20% and 40% of the issued capital of Andes Litio SA ("Andes Lithio"), which holds option rights over the San Jorge Lithium Project (called "Call Option" for short). The call option is likely to result in an exercise price of around US$40 million to US$80 million.

If the Call Option is exercised by NIO, the proceeds will be mainly used to accelerate outstanding option payments over the San Jorge Lithium Project, with 80% of the remaining proceeds to contribute to funding for Greenwing's pro rata share of the development expenses and working capital requirements.

After being reached for a comment, NIO said it would continue to work on the evaluation and deployment of the upstream supply chain related to core parts of intelligent electric vehicles, so as to maintain a long-term competitiveness.