ASX-listed silica and sand products developer Perpetual Resources has reached a binding option deal with RTB Geologia E Mineração (RTB) to purchase a 100% stake in four lithium exploration permits in Minas Gerais, Brazil.

The tenements are located within the Eastern Brazilian Pegmatite District, which is known for its hard-rock lithium spodumene deposits.

The region contains nearly all of the officially recognised lithium reserves in the country.

These four tenements cover a total land area of around 3,643.99 hectares (ha). The first tenement covers 71.10ha while the second covers 379.94ha.

The third and fourth tenements span 1,812.66ha and 1,380.29ha, respectively.

According to the company, the tenements have the potential to meet high-level prospectivity and are located within Granitic rocks formed during the Araçuaí orogeny.

Perpetual Resources managing director Robert Benussi said: “The team are very excited to have secured such a highly prospective group of tenements within a mining-friendly jurisdiction at the doorstep of Sigma Lithium’s Grota do Cirilo spodumene project, one of the largest, highest-grade and lowest-cost hard rock lithium deposits in the world.

“The tenements are located within Brazil’s Tier 1 mining region, and we are looking forward to getting under way with some initial fieldwork during the due diligence period.”

According to the agreement, Perpetual Resources has until 18 September 2023 to complete due diligence and exercise or terminate the option.

Once exercised, the company has to make a cash payment of A$50,000 ($33,645) within five days after exercising the option.

It also has to issue five million shares to RTB or to its nominees and five million unlisted options at A$0.025 and five million unlisted options at A$0.03 with a two-year expiry date within the five-day period.

It also has to pay another A$50,000 in cash within six months following the expiry of the due diligence period and contribute A$100,000 towards developing the project a year after the expiry of this period.

RTB will transfer the interest only after the payments and after the issue of shares and options.

The Brazilian company is also entitled to receive a 2% net smelter return royalty over minerals produced at the tenements. Perpetual will have the right to buy back half of the royalty for A$500,000.

RTB will receive deferred consideration of A$50,000 and five million shares if at least six rock chips are reported above 1% lithium oxide (Li₂O) spodumene before the end of September.

If 1% Li₂O spodumene is reported at 10m or greater continuous intercept within five years, it will receive ten million shares.