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Galan Lithium to acquire major stake in LIT's Greenbushes South Lithium Project

  • January 14, 2021 07:02 PM AEDT
  • Kunal Sawhney
    CEO Kunal Sawhney
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    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

Galan Lithium to acquire major stake in LIT's Greenbushes South Lithium Project

Summary

  • Galan Lithium to secure 80% interest in LIT's Greenbushes South Lithium Project.
  • The project is located in a well-known lithium district, nearly 3km south of the Greenbushes Lithium Mine.
Gold MTF non-AMP

Lithium Australia NL (ASX: LIT) and Galan Lithium Limited (ASX: GLN) have joined hands for an JV and an acquisition deal to transfer LIT’s 80% interest in Greenbushes South Lithium Project to GLN.

Lithium Australia Managing Director Adrian Griffin highlighted that the deal was in line with the company's ongoing strategies and the company is delighted to associate with a dedicated explorer to take the Project forward.

The agreement will reduce LIT's financial commitment and exploration risk towards the project. Yet, it will retain considerable lithium commodity exposure through 20% project equity and GLN's shares.

Galan's Managing Director Juan Pablo (JP) Vargas de la Vega also commented on the agreement stating that the company was delighted about the purchase deal in the well-known lithium district. With this acquisition, Galan is ready to expand its lithium exploration territory at Greenbushes in WA. The acquisition process will progress in a step-by-step manner, and the market will be updated on the progress, he added.

Also read: Lithium Australia grants an option to Charger over Australian exploration assets

Transaction Details

  • With the issue of 1,221,000 fully paid ordinary shares in the capital, GLN will form unincorporated JV between Galan for 80% stake and Lithium Australia for 20% interest.
  • Galan to pay the LIT’s JV expenditure share until the initial feasibility study gets completed.
  • After Galan pays the expenditure, both parties need to contribute to JV on a pro-rata basis; otherwise, the company may dilute while retaining a 2% net smelter royalty.
  • It is anticipated that the takeover will conclude within five business days or any later date on which both parties agree.
  • Regulatory approvals are mandatory for selling exploration and prospecting license.

Greenbushes South Lithium Project Details

Image source: ASX announcement dated 14 January 21

The project is located 200 km south of Perth, WA, covering 353 km2. One of the major highlights of the project is its proximity to the world-class Greenbushes Lithium Mine aka Greenbushes, which is currently the biggest hard-rock lithium mine in the world. Moreover, project’s tenement covers the southern strike projection of the Greenbushes hosting geological structure.

Lithium Australia's Greenbushes South Lithium Project is around 3km south of the open-pit mining operations of Greenbushes.

Image source: ASX announcement dated 14 January 21

The earlier exploration reports suggest that the project includes pegmatites rocks that may host spodumene. Consequently, it offers immediate exploration targets. However, most of the earlier work was focussed around minerals cassiterite (tin) and tantalite (tantalum). Now the discovery of spodumene for lithium extraction is the primary driver of revenue.

Talison Lithium Pty Ltd has been operating Greenbushes since May 2014. The company is a JV between Tianqi Lithium Corporation, having 51% interest in the company, and Albemarle Corporation, with 49% interest. The spodumene found in Greenbushes gets transferred to mineral conversion plants in China and Western Australian or to the technical-grade spodumene concentrates' consumers in China, Europe, and North America.

Recently, Australian mining firm IGO Limited (ASX:IGO) signed a deal with Tianqi Lithium to acquire a 24.99% stake in Greenbushes.

Related: IGO Limited (ASX:IGO) to Acquire Stakes in Greenbushes and Kwinana Assets

On 14 January 2021, LIT closed the day’s trade at AUD 0.079, up by 6.7%.

 

 


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