ION Energy Ltd said it is set to join forces with Toronto-listed Aranjin Resources Ltd (TSX-V:ARJN, OTC:FVVSF) on an exploration joint venture in Mongolia, which will be the largest holder of lithium and copper exploration licences in the country, and help the drive towards global electrification.
ION and Aranjin will grant each other a reciprocal right to explore one another's properties, with Aranjin earning an 80% interest and ION earning 20% in all base metal projects discovered on ION's properties. And ION will earn an 80% interest and Aranjin 20% interest in all lithium projects discovered on Aranjin's properties, subject to existing royalties.
The area covered by the venture comprises all rights in Mongolia currently held by both ION and Aranjin, which consists of the Sharga project, the Bayan Under project, the Baruun Tal project (pending final purchase), the Baavhai Uul project, the Urgakh Naran project and all rights acquired by each, after the date of entering the deal.
READ: ION Energy unveils new lithium discovery at its Baavhai Uul lithium salar project in south-eastern Mongolia
Aranjin will appoint the CEO of ION Ali Haji to the board of Aranjin and also as president and CEO at Aranjin. Meanwhile, Matthew Wood will resign as CEO of Aranjin and continue to act as executive chairman of Aranjin.
"This joint-venture allows for ION Energy to work alongside Aranjin resources on two very important elements that are required for the clean, green energy revolution," said Ali Haji, the CEO of ION and Aranjin in a joint statement.
"The synergistic makeup of each company will allow for this joint-venture to represent the largest lithium and copper exploration licence holders in Mongolia, forge a solid battery metals presence in Asia's supply chain, and help drive the electrification of the future. We look forward to working together and receiving the balance of our exploration results," he added.
Under the JV deal, each company will bear its own costs of exploration on the properties of the other party, with ION obligated to expend at least US$500,000 and Aranjin US$3,000,000 over the three years commencing from the date of the tern sheet. Aranjin shall be entitled to satisfy any shortfall of its required expenditures in cash up to US$2.5 million.
If a party has prepared a feasibility study on a deposit on a licence of the other party, and the party wishes to undertake development, the parties shall negotiate a separate joint venture or similar.
If a firm fails to prepare a feasibility study in respect of a deposit on the licence of the other party within five years, the rights of the non-performing party under the term sheet will be terminated.
ION also updated on its current activity in the statement, saying that maiden exploration at its Urgakh Naran project is expected to begin in coming weeks.
Meanwhile, at its Baavhai Uul (BU) project, a maiden augur drill program was completed in the Fall of 2021 and 50% of the assay samples have so far been returned. Initial results are highly encouraging with a new copper and nickel discovery at the center of the Baavhai Uul licence, said ION.
Hydrogeological sampling and advanced lithium exploration techniques will begin on Baavhai Uul in April 2022, the company added.
"With the promising early results and evidence of copper at the Baahvai Uul Project we are excited to expand our portfolio of prospective copper assets. Partnering with ION allows us to diversify Aranjin's asset footprint and our exploration spend, said Matthew Wood, executive chairman of Aranjin.
ION's Baavhai Uul asset is an over 81,000-hectare lithium brine project that represents the largest and first lithium brine exploration license award in Mongolia. ION also holds the more than 29,000-hectare Urgakh Naran lithium brine licence in Dorngovi Province in the country.
Contact the writer at giles@proactiveinvestors.com