Galileo Mining (ASX:GAL) has agreed to sell an initial 30% of its lithium rights on the Norseman Project in Western Australia for $7.5 million to mining heavyweight Mineral Resources (ASX:MIN).
The news was welcomed by the market, with investors pushing shares up over 18% to an intra-day high of $0.29 on Monday (3 June) morning.
A wholly owned subsidiary of MinRes, which has a market capitalisation of $14 billion, will pay Galileo the first $5 million within five days of the execution of the joint venture agreement.
The remaining $2.5 million is due within a year of signing the deal.
MinRes can elect to boost its stake to 55% by sole funding $15 million worth of exploration over four years. The company then has the option to increase that to 70% by sole funding through to a decision to mine.
Once MinRes has a 70% stake, Galileo then has to decide whether it will remain in a joint venture and contribute to development costs or convert its stake to a royalty.
Galileo, which has a market capitalisation of $48.4 million, will retain ownership of the Norseman Project tenements and all the rights to nickel, platinum group elements and all minerals other than those contained within the lithium-bearing pegmatites.
Galileo Managing Director Brad Underwood says the company will benefit from a focused program of lithium exploration by MinRes, as well as increasing its cash reserves to aggressively pursue other high value resource discoveries at both the Norseman and Fraser Range projects.
“With $5 million of additional funding to be received within five days of execution of the agreement, a further $2.5 million to be received within 12 months, and $10 million in the bank, Galileo is fully funded to undertake all of its planned exploration programs,” he says.
The 278km2 Norseman project contains the Callisto Discovery and adjacent regional prospects, Jimberlana and Mission Sill.
The mining lease that hosts the 17.5-million-tonne Callisto PGE-nickel resource is excluded from the joint venture, according to Galileo.
Write to Angela East at Mining.com.au
Images: Galileo Mining
