New Age Metals Inc (TSX-V:NAM, OTCQB:NMTLF) (NAM) revealed that it has signed a final farm-in/joint venture agreement with a wholly owned subsidiary of Mineral Resources Limited (MRL), a major Australian lithium and iron ore producer.
In a statement, New Age Metals CEO Harry Barr said: "The stated mandate for our lithium division since acquisition of our projects was to secure a strategic partner with exploration, development, and production expertise, and this agreement with Mineral Resources Ltd (ASX:MIN) fulfills our objective.”
“Mineral Resources is one of the world’s largest lithium producers with a current market capitalization of approximately A$12 billion. This agreement replaces the binding term-sheet that was announced in September 2021. Our final agreement comes at an opportune time where North American lithium demand is high and there is a growing need to introduce local supply to meet that demand.”
READ: New Age Metals boosts land holdings in lithium-rich Winnipeg River Pegmatite Field
He noted that lithium is on Canada's Critical Minerals List and is essential to Canada's economic security.
“Manitoba is an underexplored region in North America for lithium and rare elements and is host to the Tanco Mine, which currently is Canada's only lithium producer. NAM is the largest land holder in the Winnipeg River Pegmatite field, with many of the projects strategically located in and around or adjacent to the Tanco Mine,” said Barr.
“This is a strategic transaction for New Age shareholders as it provides both, a non-dilutive financing for the development of our substantial lithium division through a partnership with one of the world’s largest producers and the flexibility to finance our share of the projects through various methods. The exploration budget for 2022 is $1.8 million.”
Under the terms of the agreement, Lithium Mineral Resources Private Limited, a wholly owned subsidiary of MRL can earn up to a 75% interest in New Age Metals’ Manitoba Lithium Division owned by Lithium Canada Development, a wholly owned subsidiary of New Age Metals as follows:
- MRL has the right to acquire an initial 51% interest by completing C$4 million of exploration and development activities and C$400,000 in cash payments within 42 months from the effective date with a minimum mandatory expenditure of C$1 million of exploration and development activities within 18 months.
- According to the agreement, MRL can earn an additional 14% interest (65%) by completing a NI 43-101 compliant mineral resource estimate and Pre-Feasibility Study on developing a spodumene concentrate operation at one or more of NAM's Projects.
- MRL can earn an additional 10% interest (75%) by funding the project to the point of a final construction decision made by MRL within 7 years from the effective date (final farm-in period).
NAM shall have the option to complete an initial public offering of NAM's joint venture interest or spin out NAM's minority joint venture interest into a public vehicle holding.
The Manitoba Lithium Division's budget for 2022 is $1.8 million which will include a minimum of 2 drill programs, satellite data acquisition and analysis on all claim areas, helicopter-borne tri-axial magnetic surveying, and a summer mapping and prospecting program.
Investors can read the comprehensive term sheet here.
New Age Metals is a junior mineral exploration and development company focused on the exploration and development of green metal projects in North America. It has two divisions: a Platinum Group Metals division and a Lithium/Rare Element division.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive