Neometals seeks Mt Marion No.2 with lithium acquisition
Neometals has announced the acquisition of the Mt Edwards Lithium project, 40km from its operating Mount Marion Lithium project in the emerging high-grade lithium-caesium-tantalum bearing pegmatite region between Coolgardie and Norseman in W.A.
The Company will procure 100% of the lithium rights to 240km2 of tenements, containing significant strike lengths of outcropping lithium-rich pegmatites that have returned rock chip samples up to 3.40% lithium oxide.
Interestingly, Mincor Resources has also reported exceptional rock chip sampling and drilling results up to 3.01% Li2O, 4150ppm caesium and 348ppm tantalum on nearby leases. Mincor has also confirmed the presence of sought-after spodumene and lepidolite mineralisation, most common in higher grade lithium deposits.
The acquisition of the brownfields Mt Edwards project is a key strategic play for Neometals in the region, where it already holds a 13.8% interest in the producing Mount Marion lithium asset and exposure to the highly prospective Forrestania-Mt Holland project area, via its 36% holding in Hannans Ltd.
Hannans recently pegged a large exploratory project area adjacent to Kidman Resources’ globally significant Earl Grey lithium deposit that boasts a staggering mineral resource of 144 million tonnes grading 1.44% Li2O.
Neometals Managing Director, Chris Reed, commented on the Mt Edwards Lithium project acquisition by saying; “This acquisition will increase and broaden our lithium asset base and, subject to exploration success, will potentially provide a second source of spodumene production enabling an integrated lithium business to grow in size and scale. Our strategy is to integrate to move down the cost curve then scale the business up to meet the demands of the next decade.”
Under the proposed transaction, Neometals has set out a sale consideration of $2.7M to Mt Edwards Lithium Pty Ltd, a fully owned subsidiary of ASX listed Estrella Resources who holds 75% of all lithium rights over the 20 transacted tenements.
The deal is subject to the satisfaction of certain milestones, but will kick off with a $700,000 cash payment to Mt Edwards Lithium on completion of the acquisition.
A further $1M will be paid to Mt Edwards upon definition of a JORC compliant mineral resource exceeding 2 million tonnes at greater than 1% Li2O and another $1M will change hands upon the future processing of 2 million tonnes of ore grading higher than 1% Li2O from the project tenements.
Mt Edwards will also receive a 50c per tonne royalty based on 75% of the lithium processed from the acquired tenement package.
Additionally, the company will obtain the balance of the remaining 25% of the lithium rights by acquiring ownership of 19 tenements from Apollo Phoenix Resources Pty Ltd for $1.8M, upon completion of the transfer of all those assets.
Neometals will also procure three additional tenements outright from Apollo and obtain the nickel rights on 14 neighbouring tenements. A significant historical, non-JORC mineral resource of more than 100,000 tonnes of nickel reportedly exists on this combined tenure and the company will no doubt look to Jorc this up as quickly as it can.
Completion of the acquisitions is expected to occur within 2 to 3 months.
Most of the tenements that are the subject of the deal are already granted mining leases.
They are also in the prominent mining district of the Goldfields that is well supported by excellent infrastructure. These are key drivers for Neometals who has already shown with Mt Marion that they don’t muck around when it comes to getting a project production ready.
It is estimated that 58,000 metres of historical drilling has been conducted in the Estrella Resources’ ground holding alone, with little interest being paid at the time to the pegmatite intersections in the gold-nickel dominated mineralisation.
Neometals has a treasure trove of open file data to trawl through at this project in order to expedite its search for lithium.
Previous owners indicated that 40% of the pegmatites mapped in this region have not been adequately sampled and sub-surface drilling of the known deposits is almost non-existent.
Could this be Mt Marion number two?