Mila Resources PLC (LSE:MILA) and its partners have granted Aussie-listed giant Liontown an option to explore for lithium on its Katleen Valley licence in Western Australia.
Liontown already has a lithium project nearing production on acreage adjacent to Kathleen Valley with offtake deals in place to supply LG, Ford and Tesla.
The proposed transaction sees Liontown, which recently rejected a A$5.5bn bid from Albemarle, fund all lithium exploration activities, mining costs and associated heritage surveys in return for an option to acquire the right to extract lithium.
Mila and partners Trans Pacific Energy (TPE) and New Generation Minerals (NGM) will maintain ownership over the gold and other minerals on the licence area.
Under the terms of the deal, Liontown has the option to acquire up to 80% of the lithium rights from Mila and TPE for a total consideration of up to A$2.2mln.
By agreement with TPE and NGM, Mila currently has a 50% interest in the lithium rights, representing 10% of the lithium rights following full exercise by Liontown of its option.
Mark Stephenson, Mila’s chief executive, said: "This is a highly exciting development which adds a new and potentially valuable dimension to the Kathleen Valley Project.
"Through this agreement with Liontown, we will see lithium exploration underway at this area of the licence, which has been untested to date, and opened up for exploration whilst being insulated from costs.
“This lithium mineralisation has been shown to have strategic importance on an international scale, most recently evidenced by a proposed A$5.5bn bid for Liontown by Albemarle Corporation, one of the largest lithium producers worldwide.”