Reed Resources has moved to expand its tenement portfolio, signing a $3.2 million option agreement to acquire the Mount Marion lithium project near Kalgoorlie.
The agreement will help to boost Reed's position as a diverse commodity company, following the recent acquisition of a silver project in the region and the possible acquisition of Windimurra Vanadium's assets.
The assets would reduce the cost of Reed's flagship $629 million Barrambie vanadium project, located near Windimurra's namesake mine.
Windimurra fell into receivership earlier this year after delays in approvals.
Under today's agreement, Reed said it will pay a $200,000 option fee to the unnamed vendor with the option period to last two years.
Should Reed exercise the option to acquire the project, it will pay a further $1.5 million in cash and then an additional $1.5 million on a decision to mine.
Reed will also pay royalties when the operation is up and running.
Western Mining Corporation carried out extensive exploration between the 1960s and 1980s and completed a study which estimated the production of 5,000 tonnes of lithium carbonate each year over a mine life of 10 years.
Reed managing director Chris Reed said the agreement was in line with the company's strategy of gaining an exposure to "in demand" commodities in a low risk fashion.
"We are really excited by this opportunity which provides us with a low risk exposure to the lithium market, an increasingly strong performing sector", he said.
"Importantly, this project has been substantially de-risked by previous extensive test work and evaluation.
"In addition it is located close to existing rail and energy infrastructure, being less than 40km from the mining town of Kalgoorlie, ticking all the boxes we were looking for in a new project acquisition."
Shares in Reed climbed 7.5 cents to 33c at 12:03 AEST.
