Pilgangoora Minerals has signed a farm‐in agreement to earn an interest in Venus Metals’ lithium tenements in Western Australia.
Under the terms of the agreement, Pilgangoora Minerals will explore for lithium-bearing pegmatites on exploration licences in return for an interest in these tenements and lithium and associated minerals.
The licences include E45/4630 and E45/4684, at the Pilgangoora East project; E45/4627 and P45/3004 at Wodgina South; and E20/885 and E20/896 in Poona.
Pilgangoora Minerals has paid $200,000 to Venus in cash to gain access to these tenements.
The earn-in programme is structured in three stages. The first stage requires an expenditure of $1m in the first year on exploration activities, followed by a further payment of $200,000 in exchange for a 25% interest in pegmatite minerals rights over the tenements.
During the second stage, Pilgangoora Minerals can increase its stake to 50% by spending another $1m towards exploration costs and paying $350,000.
At this stage, a joint venture (JV) will be formed between the companies, with each firm owning a 50% interest in the entity.
Thereafter, Pilgangoora Minerals can choose to exercise an option to earn a further 25% interest. To achieve this, the company is required to complete a bankable feasibility study within five years of the date of formation of the JV.
Venus’s JV interest will be free carried until a decision to mine. Pilgangoora Minerals is responsible for arranging project finance and will also fund Venus’ share of costs as a development loan.
Venus will repay the loan from the proceeds of sale of production. The company will retain all rights over minerals other than pegmatite minerals.