Perth-based explorer Cazaly Resources (ASX:CAZ) has entered an exclusive binding agreement to acquire the Sundown Lithium Project in Canada for CAD$4 million.
Under the terms of the transaction, the company will acquire 100% of the project by paying a non-refundable option fee of CAD$50,000 to the vendors for a 2-month exclusivity period to complete due diligence.
Subject to satisfactory due diligence, Cazaly will pay CAD$350,000 cash and CAD$600,000 in cash or stock to secure a 25% equity. The company will then pay a further $250,000 cash and $750,000 in cash or stock at the end of the first, second, and third years each to secure the remaining 75% interest.
Further, Cazaly will grant the sellers a 2% net smelter royalty (NSR) but will retain the option to buy back 1% of the NSR for CAD$1 million.
The company closed trade on the ASX today 44% higher at $0.036 per share.
Cazaly says once due diligence has been completed, it will conduct an initial reconnaissance mapping and rock chip sampling program at the project.
This program will aim to assess the ‘large’ number of documented outcropping pegmatites for spodumene and lithium mineralisation, which will inform Cazaly’s exploration strategy to drill-test the best targets in the next phase of exploration.
If the company proceeds with the acquisition, existing cash reserves will be used to start the activities, with work projected to begin in the September quarter of 2023 following land access approvals.
Commenting on the agreement, Cazaly Resources Managing Director Tara French says: “We are extremely pleased to have an exclusive binding agreement to acquire the Sundown Lithium Project. The project is an excellent addition to our recent Canadian Rare Earth Element Project acquisition and provides Cazaly with another excellent discovery opportunity, this time for lithium, another critical mineral.
“The project is a massive landholding in the heart of the James Bay Lithium district, a district known for its very large-scale and high-grade lithium resources”
The project is a massive landholding in the heart of the James Bay Lithium district, a district known for its very large-scale and high-grade lithium resources. Data acquisition and compilation have commenced, and desktop studies are underway as part of our due diligence process, which will in turn advance the project and inform our exploration work plan moving forward.”
Cazaly reports Sundown covers 510 mining claims over 3 contiguous blocks within the Opinaca Subprovince in the centre of the Archaean Superior Province in the heart of the Eeyou Istchee James Bay territory, which hosts ‘significant’ lithium resources.
Cazaly reports the Quebec Ministry of Natural Resources and Forestry (MERN) identified over 200 pegmatites in outcrop across the project area. In 2022, MERN geologists identified the Gladman Suite as a new lithium prospective zone, characterised by the presence of numerous east-to-west trending pegmatitic granite dykes.
The company says the presence of tourmaline, garnet, and muscovite in these rocks indicates a hyperaluminous composition suitable for developing lithium mineralisation. Additionally, these details were only recently made available digitally on Quebec’s interactive geological portal, SIGEOM.
Cazaly also notes ‘very little’ exploration has been conducted across the mining claim package, with most of the previous exploration completed by MERN including rock chip sampling and lake bottom sediment sampling with a focus on gold.
Cazaly Resources is a Perth-based diversified resource company focused on its portfolio of assets in Australia, Namibia, and Canada. These projects include the Halls Creek and Ashburton projects in Western Australia, along with the Abenab North and Kaoko projects in Namibia and the Carb Lake Project in Canada.
In Western Australia, Cazaly also holds a 30% interest in the McKenzie Springs Project with Fin Resources (ASX:FIN) and a 20% interest in the Mt Venn Project with Woomera Mining (ASX:WML).
Write to Harry Mulholland at Mining.com.au
Images: Cazaly Resources Ltd