Mineral Resources (ASX:MIN) is intending to develop Poseidon Nickel’s (ASX:POS) Lake Johnston Project into a lithium processing hub, upon entering into a binding heads of agreement.
Subject to conditions with Poseidon, MinRes, which has a market capitalisation of $12.86 billion, will pay $1 million upon executing the agreement, $6.5 million on completion of the sale, and a further $7.5 million 12 months after completing the project.
The company says the acquisition aligns with its strategy to process fines from its Bald Hill and Mt Marion lithium operations, to make new discoveries in the region, and third-party ore deals.
Managing Director Chris Ellison says: “This is an exciting opportunity to develop MinRes’ third lithium processing hub in the Goldfields and the first to include flotation capacity to treat fines.
We intend to bring our expertise in spodumene production to Lake Johnston, which has the potential to service projects throughout the world’s most prospective region for lithium.”
As part of the agreement, the company must complete legal due diligence of the assets, assign third-party agreements on terms acceptable to Mineral Resources, and receive consent from the Minister for Mines and Petroleum under the Mining Act for the transfer of all rights and obligations in respect of the tenements.
Poseidon Nickel Chief Executive Officer (CEO) Craig Jones says the transaction enables the company to continue its strategy to progress its own exploration targets, while progressing new opportunities.
“Under the binding heads of agreement, Poseidon will be paid $15 million in cash while retaining an exposure to any exploration success at Lake Johnston with royalties from any future minerals or metals production from the project tenements.
The proposed Lake Johnston divestment will also reduce our annual expenditure commitments by approximately $1.4 million and remove the rehabilitation provisions for that project from our balance sheet.”
Lake Johnston is licensed to operate to 2041 and has an active groundwater extraction licence. Onsite infrastructure include an airstrip, 200-person camp, electrical infrastructure, workshops, and laboratories.
Mineral Resources is a diversified resources company focused on lithium, iron ore, energy and mining services across Western Australia.
Write to Aaliyah Rogan at Mining.com.au
Images: Mineral Resources
