Adelong Gold (ASX:ADG) has executed a binding agreement with Brazilian resident Rafael Mottin to acquire 100% interest in 3 applications for lithium exploration permits in Minas Gerais.
The $5.36 million market capitalisation company says the acquisition is pivotal for Adelong and paves the way to secure a strategic landholding in a ‘significant’ mining-friendly region for hard-rock lithium spodumene deposits.
Key terms of the acquisition agreement include an initial payment of $100,000, which has been paid, the issue of 20 million shares to the vendor within 5 days, and the issue of 20 million unlisted options to the vendor, exercisable at $0.02 within 2 years of completion of the transaction.
The deal will complete within 5 days of the conditions precedent being met, which includes obtaining shareholder approval to refresh the company’s placement capacity and issue the shares and options, grant the tenements, and a formation of a Brazilian subsidiary and obtain all approvals to transfer the tenements.
Adelong has also received oversubscribed firm commitments for a placement to raise $1 million at $0.008 per share, with one-for-two attaching options exercisable by 30 June 2026 at $0.02, subject to shareholder approval.
The total project area applied for covers 53.17km-square.
Commenting on the acquisition, Adelong Gold Managing Director Peter Mitchell says: “Brazil is emerging as a major global lithium producing region and we are delighted to acquire 3 exploration permits in this sought-after lithium jurisdiction.
This represents the company’s first foray into Brazil and is part of our strategy to diversify our project base and to be an active participant in the massive battery metals space.”
Subsequent to today’s (22 September) announcement, Adelong’s share price had increased 11.11% to $0.010 as of 1:45pm AEST .
All 3 permits are ‘largely’ unexplored for lithium and show ‘strong’ potential to host lithium-bearing pegmatites. Adelong says a review of the regional and local geology suggests the area has attributes of good potential for hosting lithium-bearing pegmatites.
The company is planning to kick off exploration activities in the coming months and has an existing on-ground team in place.
Adelong Gold is a minerals exploration company, primarily focusing on gold and lithium. As of 30 June 2023, the company had $771,000 cash at hand, according to its latest quarterly report.
Write to Aaliyah Rogan at Mining.com.au
Images: Adelong Gold