Sovereign Gold Company Ltd (ASX:SOC) has secured an option to acquire 28 unpatented mining claims within the Crescent Lake Lithium Prospects in Ontario, Canada.
The 50.7 square kilometres of claims contain four lithium-bearing deposits and outcropping lithium-bearing pegmatites.
The claims are adjacent to Ardiden Ltd’s (ASX:ADV) Seymour Lake Lithium Project and Argonaut Resources NL’s (ASX:ARE) Zigzag claims that contain lithium-bearing pegmatites.
Ardiden's claims host pegmatites up to 26 metres wide grading up to 2.38% lithium.
A local geological team is expected to be engaged shortly and discussions are underway with local drilling operators.
Sovereign recently secured their maiden lithium project in the Clayton Valley Basin in the U.S state of Nevada near one of the world's largest lithium producers.
Option agreement details
Sovereign entered into an option agreement with Canadian Stockport Exploration Inc.
The principal terms of the option are:
- Upon execution of the option agreement, Sovereign must pay C$100,000, C$75,000 within 75 days, C$75,000 within 150 days and issue C$250,000 worth of shares;
- Upon exercise of the option, Sovereign must pay C$400,000 in eight quarterly instalments and C$500,000 in cash or shares at Stockport’s election;
- Any shares issued to Stockport will be at $0.006;
- The claims are subject to a 2% net smelter returns royalty;
- The company has issued 12,333,333 shares in lieu of a A$74,00 advisory fee; and
- An additional 8,333,333 shares will be issued upon signing the definitive agreement at the conclusion of the due diligence period.
Analysis
The claims at Crescent Lake suggest strong geological indicators of a potentially large scale lithium deposit.
The area contains potential extensions of the lithium-bearing pegmatites found in Ardiden's adjacent ground.
Sovereign currently has $2.5 million cash at bank, sufficient to fund exercising of the option to acquire the claims.
A class-one rail line is located 42 kilometres from Sovereign's claims and interconnects with the U.S.
Sovereign recently exercised an option to acquire its maiden lithium project located near one of the world's largest lithium producers, Albemarle Corporation (NYSE:ALB).
The project is located in the Clayton Valley Basin in the U.S state of Nevada and is within 400 kilometres of the Tesla Motors Inc (NASDAQ:TSLA) mega-factory.
Tesla has publicly stated that they wish to source as many raw materials as possible from North America to build a viable domestic supply chain and minimise transportation costs.
If Sovereign exercises this option, this would be their second lithium project in North America.
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