Neometals (ASX:NMT), formerly Reed Resources, has entered into a binding Memorandum of Understanding with Metals X (ASX:MLX) to lease the lithium mining rights over a portion of the Hampton Area Location 53 in Western Australia.
The company’s 70%-owned Reed Industrial Minerals Pty Ltd (RIM) will also purchase an adjoining mining lease and infrastructure.
Formal agreements are expected to be drafted and executed in due course. Metals X will retain the gold rights.
Leading mining services provider Mineral Resources (ASX:MIN) owns the remaining 30% of RIM and funds and operates the project through its subsidiary, Process Minerals International Pty Ltd
The agreement enables RIM to explore and develop extensions of the Company’s No 2 and No 2 West Lithium Deposits, located on the northern boundary of the Mt Marion Project, which is located just 40 kilometres southwest of Kalgoorlie.
Prior drilling at the No 2 and No 2 West deposits by RIM in 2010-11, was restricted due to the tenement boundary, however results showed the ore body remained open suggesting that lithium mineralisation continues into the newly leased tenements.
The Hampton Area Location 53 hosts spodumene outcropping previously identified and mapped by Western Mining Corporation, including the No 3 Deposit.
The Agreement also includes the acquisition of an adjoining tenement (M15/717) and associated infrastructure which will provide potential tailings storage, optimal waste dump positioning and access to an existing heavy haul road.
Details of the Agreement are as follows:
- Lease period of up to 20 years, being an initial 10 year lease, with options for two 5 year extensions, for a 3 kilometre by 1 kilometres portion of Hampton Freehold Location 53, containing extensions to the Mt Marion Lithium Projects Deposit 2 and 2 West and former WMC Deposit 3 for approximately $90,000 per annum (indexed to CPI) plus royalty;
- Royalty payable to Metals X of A$2/t of ore mined and 1.5% of gross sales value of resulting concentrate produced from ores processed.
- Purchase of adjoining Mining Lease M15/717 and Miscellaneous Licence 15/220 containing the existing Mt Marion Gold Open Pit and Haul Road for $250,000. Metals X retain all gold and access rights to the tenure and pre-emptive rights in any upstream or downstream sale.
Neometals will now focus on securing binding offtake agreements for Mt Marion before the project partners make a final investment decision.
Lithium demand is driven by its use in rechargeable lithium-ion battery used by electric cars and energy storage.
Mt Marion Lithium Project
During the December quarter, the company advanced the Mt Marion Lithium Project with the successful continuous production of lithium hydroxide catholyte from a semi-pilot plant in the U.S.
The semi-pilot scale demonstration plant conducted by specialist chlor-alkali laboratory Process Technology Optimisation in Buffalo, U.S. successfully achieved 200 hours of operation at 80% efficiency during the quarter.
The test work demonstrates the reproducibility of the successful purification and electrolysis of lithium chloride solutions, and the suitability and durability of the ion exchange membrane for commercial operation.
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