Reed, MinRes amend Mt Marion structure

Reed Resources and joint venture partner Mineral Resources have agreed to amend the ownership structure of the Mt Marion lithium project to achieve a greater alignment of interests for the downstream processing of the minerals for use in batteries.

The previous arrangements involved MinRes building operating and processing plants, funding development costs, and earning 40 per cent of the operation's profits.

Under a new memorandum of understanding, MinRes will fund and operate the project, and the profit right will be converted into a 30 per cent equity interest in Reed Resources.

MinRes said it would endeavour to complete construction by September 30, and commission the plant on or before December 15.

Reed Resources holds 100 per cent of the Mt Marion project.

"This binding MoU directly aligns the interests of Reed and MRL and provides a clear path to production for the world's second largest source of spodumene concentrate," Reed Resources managing director Chris Reed said.

"We expect, with by-products the Mt Marion lithium project to be globally cost competitive and operate at the lower end of the cost curve.

"As joint equity owners of the underlying resources both parties are now incentivised to expand resources and evaluate increasing production rates."

Reed said the lithium mine was on schedule for a December quarter start, with an initial capacity of 200,000 tonnes per annum of chemical grade spodumen concentrate, 60,000tpa of mica and 30tpa of tantalum concentrate.

Spodumen concentrate is used to produce battery grade lithium carbonate.

Reed and its advisors, Gresham Advisory Partners, are currently negotiating with third parties in relation to various transaction structures, ranging from downstream treatment and joint ventures, through to partial and outright acquisition of the upstream operations.

Reed said discussions were preliminary and it would keep the market informed as agreements develop.