Charger Metals’ Deal with Lithium Australia Opens Door for Rio Tinto Farm-In
THE BOURSE WHISPERER: Lithium Australia (ASX: LIT) and Charger Metals (ASX: CHR) signed a binding agreement for the sale of Lithium Australia’s remaining interest in the Lake Johnston lithium project in Western Australia.
The deal will entail Charger Metals parting with a $2 million cash consideration for Lithium Australia’s remaining 30 per cent holding in the project.
Lithium Australia, however, will not vacate the project entirely with part of the acquisition agreement ensuring it will also receive a conditional first right of refusal over the lithium product produced from the tenements.
This first right of refusal covers lithium product equal to the lower of:
• 30% of the lithium product produced on the relevant tenements for the term of the agreement reached for offtake, should a binding agreement be reached; and
• The lithium product required by Lithium Australia to produce lithium metal phosphate product through a commercial facility(s) in which Lithium Australia has an ownership interest of 25% of more.
A smart move considering Charger immediately announced a binding farm-in agreement with Rio Tinto Exploration (RTX), a wholly-owned subsidiary of Rio Tinto (ASX: RIO) for the Lake Johnston lithium project.
The terms of tis agreement include:
o RTX to pay Charger $500,000 and invest $1.2 million in Charger prior to commencement of farm-in; o RTX to spend minimum $3 million exploration expenditure over the first 12 months;
o RTX can earn 51% by sole funding $10 million in exploration expenditure and paying Charger minimum further cash payments of $1.5 million;
o RTX can earn 75% by sole funding $40 million in exploration expenditure or completing a Definitive Feasibility Study.
“The Rio Tinto Exploration farm-in agreement is an excellent result for Charger and its shareholders and reaffirms our belief that the Lake Johnston project has potential to host a large-scale lithium deposit,” Charger Metals managing director Aidan Platel said in the company’s ASX announcement.
“The planned significant investment by RTX will allow thorough systematic exploration over all of the project tenure, with initial exploration focused on fast-tracking the Medcalf spodumene prospect as well as progressing the Mt Day and Mt Gordon lithium prospects.”
TO READ THE FULL LITHIUM AUSTRALIA ANNOUNCEMENT: CLICK HERE
TO READ THE FULL CHARGER METALS ANNOUNCEMENT: CLICK HERE