DY6 Metals, an Australia-based company, has reached an exclusive option deal to acquire an 80% stake in the Karonga Lithium Project in Malawi.

The project, located in northern Malawi, spans 39km² and is adjacent to DY6 Metals’ recent licence application in the same region. Combined, the two licences cover an area of 75km².

For this acquisition, DY6 Metals signed a binding term sheet (BTS) with Afro Gifts Mining and made a non-refundable cash payment of A$25,000.

This payment grants DY6 a six-month exclusive period to conduct due diligence on the project.

The BTS is contingent upon satisfactory due diligence on Afro Gifts and the project, as well as any necessary shareholder or regulatory approvals, or third-party consents.

DY6 is also finalising plans for a maiden exploration programme at the Karonga Lithium Project, set to include detailed geological mapping and sampling, with the four-week programme commencing in January 2024.

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If due diligence is successful, DY6 will be required to make a payment of $37,500 in cash and an equivalent amount in company shares upon completion.

Under the terms of the agreement, DY6 will free-carry Afro Gifts’ 20% interest in the project until the pre-feasibility study (PFS) is completed.

Post-PFS, DY6 will loan-carry Afro Gifts’ interest at the Australian Bank Bill Swap rate plus 8%, repayable from the joint venture’s profits. The BTS includes other standard terms for such transactions.

In preparation for the potential acquisition, DY6 Metals’ team conducted a reconnaissance field visit to the Karonga Lithium Project.

The team collected ten rock chip samples from four outcrops, which have been sent for laboratory analysis in South Africa.

The Karonga area is known for its N-S trending ridges and metamorphic Basement complex rocks, with Karroo System units, which are sandstones with carbonaceous shales formations.

The exploration team identified pegmatite float material in the Mwesa River and focused on pegmatite intrusions traceable for up to 500m.

These pegmatites contain high percentages of albite, microcline and occasional K-feldspar, along with muscovite and biotite micas.

Additionally, the team also observed the presence of quartz-feldspathic granulites and copper coatings on joints, with reddish-brown cuprite indicating potential mineralisation.