Lithium Australia (ASX:LIT) has entered a joint development agreement with diversified mining services company Mineral Resources (ASX:MIN) as part of a licensing deal for the former’s patented LieNA technology.
Under the agreement, MinRes will solely fund up to $4.5 million the development and operation of a pilot plant and an engineering study for a demonstration plant. MinRes will also supply the required raw materials to support the extraction process at no cost to Lithium Australia.
Lithium Australia will contribute its patented LieNA technology, which the company says has the potential to enhance lithium extraction yields by up to 50% over current market performance and will manage the pilot plant’s production process.
The JV will initially license the LieNA technology to a larger demonstration plant which MinRes can elect to independently fund, develop, and operate. The larger plant will aim to extract lithium salt at a commercial scale under the licence. The licence will apply to current and future projects of MinRes and the royalty payable by MinRes under the licence is based on a discount to the headline royalty rate above in acknowledgement of MinRes’ first mover position.
Lithium Australia’s patented extraction technology is underpinned by recovering lithium from fine and low-grade spodumene, which is usually disposed of as waste streams, improving mining efficiency, sustainability, and potential profitability.
On successful completion of the pilot plant operations and engineering study, MinRes’ convertible note will convert into equity in a new joint venture between the two companies.
Lithium Australia and MinRes will each have a 50% interest in the JV entity, which will wholly own the LieNA technology going forward. The JV plans to license the LieNA technology to third-parties at a target headline gross product royalty rate of 8%. The royalty model materially expands Lithium Australia’s addressable market as it has the potential to capture a fee on all tonnage processed via any mine utilising the technology.
The JV funding arrangements are comprised of a convertible note in a special purpose vehicle incorporated by Lithium Australia for the purposes of the JV. MinRes has been issued the convertible note with a purchase price of $4.5 million, on an interest-free basis and an 18-month term.
If the stage one activities are completed, MinRes’ convertible note will convert to equity and the parties will form the 50:50 JV. If the stage one activities are not completed and MinRes elects not to convert to equity, then the JV entity will pay MinRes 50% of the value of the LieNA technology (as agreed or otherwise determined by an expert) as repayment of the purchase price under the convertible note.
MinRes has a portfolio of mining operations across multiple commodities, including lithium and iron ore. MinRes has a market capitalisation of A$13.6 billion and in FY22, recorded revenue of $3.4 billion and produced over 450,000 DMT of spodumene concentrate for lithium extraction.
Lithium Australia reports that MinRes is an optimal strategic partner, as it mines substantial quantities of lithium at its own operations. Early target jurisdictions for licencing include Western Australia and North America, with potential for expansion into Europe and Africa as well.
“Securing a development partner is also noted as a significant step within Lithium Australia’s recently released roadmap and serves as a powerful validation of our patented technology”
Commenting on the deal, Lithium Australia Chief Executive Officer Simon Linge notes: “We are thrilled by the formation of a new partnership with Mineral Resources, one of Australia’s largest and most prominent mining companies. MinRes is the perfect partner to complement our leading lithium extraction technology, given its extensive owned operations and strategic movement downstream into the battery materials sector.
Securing a development partner is also noted as a significant step within Lithium Australia’s recently released roadmap and serves as a powerful validation of our patented technology. We are excited by the future opportunity to licence our proven high-value technology to all existing and new lithium mines across Australia and the rest of the world.”
Lithium Australia is aiming to lead and enable the global transition to sustainable lithium production. Its revenue-generating recycling business and technologies are well-placed to capitalise on growing global lithium-ion battery demand and provides diversification benefits to global supply chains.
At Lithium Australia’s Wacol pilot plant, VSPC can manufacture lithium ferro phosphate (LFP) and other battery materials according to commercial processes but on a reduced and cost-effective scale.
Comprising reaction vessels, mills, furnaces, spray dryers and other process equipment, the plant has the flexibility to configure unit operations according to a variety of process flows. This enables VSPC to rapidly scale the manufacture of battery materials from laboratory synthesis through to the semi-commercial quantities required for product performance testing and qualification by commercial battery manufacturers. In addition, the plant provides valuable data and information for commercial-scale plant design, sizing and process optimisation.
Write to Adam Orlando at Mining.com.au
Images: Lithium Australia Ltd
