White Cliff Minerals Ltd (ASX:WCN) will farm out its Lake Percy project, prospective for lithium in Western Australia through a joint venture with Liontown Resources Ltd (ASX:LTR).
Historical exploration has defined large pegmatites of up to 550 metres thick at surface and 3 kilometres long.
Liontown may earn up to 70% in the project by spending A$1.75 million on exploration within four years.
The farm-out aligns with White Cliff's strategy of divesting non-core assets while retaining a free carried interest.
White Cliff will continue to focus on developing the high grade Aucu Gold deposit in Central Asia where current drilling is expected to define a substantial gold resource in 2016.
Acquisition terms
The Lake Percy project is located 430 kilometres east of Perth, Western Australia and Liontown may acquire up to 70% on the following terms:
- by spending A$1,000,000 on exploration within 3 years to earn 51% equity;
- at Liontown’s election, it can increase its equity to 70% by spending an additional A$750,000 before the fourth anniversary of the JV; and
- by committing to spending $50,000 on exploration before having the right to withdraw from the JV.
Lithium exploration program
Exploration work will commence immediately with a review of previous drill data and geochemical sampling to test for pathfinder elements such as tantalum and niobium.
Where possible, previous drill holes will be also be sampled to test for lithium in pegmatites that have already been intersected.
This work will be used to define targets for drill testing.
Analysis
By farming out the Lake Percy project, ensures that White Cliff retains an exposure to exploration success to a demand-driven commodity, lithium.
The farm-out also means White Cliff won't be required to invest cash into lithium exploration as this will be funded by JV partner, Liontown.
The Lake Percy project is located in the Lake Johnson Greenstone Belt, which hosts several lithium-bearing pegmatites.
The region's lithium potential has been highlighted by recently announced lithium exploration results from Kidman Resources Ltd (ASX:KDR), Poseidon Nickel Ltd (ASX:POS) and Marindi Metals Ltd (ASX:MZN).
Taking a look through White Cliff's portfolio, it may also look to extract value from other remaining non-core mineral assets.
Aucu Gold Deposit
The 89% owned Aucu gold deposit is located in the Kyrgyz Republic, which is a democratic republic bordering Kazakhstan and China.
The company announced a maiden inferred resource for the Aucu gold deposit above a cut-off grade of 1 g/t gold of 1.15 million tonnes grading 4.2 g/t gold for 156,000 ounces of contained gold.
In 2015, drilling identified exceptional gold mineralisation east of this resource in the eastern upper gold zone (UGZE) over a strike length of at least 500 metres.
Results included 8 metres at 55.2 g/t gold and 4 metres at 59.9 g/t gold.
Overall metallurgical recovery of all mineralised zones discovered at Aucu is 99% with gravity recoverable gold averages of 88.6%.
2016 exploration program
The 2016 exploration program is focussed on drilling out the UGZE along 800 metres of strike to 200 metres vertical depth.
The exploration target for the UGZE in 2016 is 1-2 million tonnes at 15-30 g/t for 500,000 to 1.2 million ounces of gold.
White Cliff recently discovered visible gold in new mineralised zones at Aucu while bulldozing access roads.
The company has also recently commenced diamond drilling, targeting a 45 g/t gold average grade area within the Aucu gold project in the Kyrgyz Republic.
White Cliff is targeting the UGZE, which has an upper end exploration target of 2 million tonnes grading 30 g/t for 1.2 million ounces of gold.
The first hole is targeting a mineralised zone 50 metres below a previous intersection grading 3 metres at 41.4 g/t gold and 1 metre at 58 g/t gold.
Assay results are expected within 4 weeks of completing each drill hole and pre-assay rock chip samples will be available within 2 weeks.
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