Red Mountain Mining has signed an agreement to earn an 80% stake in the prospective Monjebup Rare Earth Project in southern Western Australia from LBM (Aust), a wholly owned subsidiary of Liontown Resources.

Located around 80km north-east of Albany, the project comprises three large exploration licences, specifically E70/6042, E70/6043 and E70/6044. These licences cover a total of 910km².

Under the binding farm-in agreement, Red Mountain can earn a stake of up to 80% in the Monjebup Project by undertaking at least A$500,000 ($334,534) in exploration expenditure within a period of 24 months.

Red Mountain will issue an aggregate of 40 million of its fully paid ordinary shares to Liontown within five business days from the agreement execution.

Upon acquiring the stake from Red Mountain, LBM will receive a 2% net smelter royalty on the minerals produced and sold from the Monjebup Project from Red Mountain. This will be attributable to Red Mountain’s stake in the project.

Furthermore, the two companies will establish an unincorporated joint venture (JV), upon meeting the farm-in exploration requirement.

Red Mountain chairman Troy Flannery said: “This is an exciting opportunity for Red Mountain to transact with a globally recognised multi-billion-dollar Australian resource company such as Liontown.

“The company looks forward to commencing initial exploration work on the Monjebup grounds, which has previously delivered highly anomalous soil sampling results up to 969ppm [parts per million] total rare earth oxide.”

Red Mountain plans to undertake sampling and metallurgical test work to assess the leaching potential of rare earth elements within the Monjebup Project.