Osmond Resources (ASX:OSM) has struck a deal with 5E Advanced Materials (ASX:5EA) to acquire the Salt Wells lithium-borate Project in Nevada, US.
The two companies have entered into a deed of assignment and an assumption agreement under which Osmond will assume exclusive earn-in rights to scoop up the project.
Osmond says this acquisition is designed to complement its existing project portfolio and will allow for all expenditure to go directly towards exploration and testing, with no outgoing cash or shares as part of the acquisition and the ability to withdraw assuming obligations at any time.
5E Advanced Materials currently holds the right to earn a full interest in the project from private company Great Basin Resources by expending a total of US$3 million inclusive of annual lease payments through to 31 December 2025.
Under today’s agreement, Osmond will assume 5E’s obligations and acquire an 80% interest in the project, with a limited right to acquire up to 100% from 5E.
The company reports 5E has partially satisfied the expenditure requirement by spending US$543,931.99 on the project. Osmund will assume the remaining $2.456 million.
Osmund notes it plans to satisfy the expenditure through 3 annual instalments of US$900,000, $800,000, and $756,068, respectively. Upon satisfying the expenditure requirement, Osmond will be entitled to the 80% legal and beneficial interest in the project.
The company aims to quickly define an exploration program, with a targeted maiden drilling program to begin in 2H CY2023, which Osmond will fund through a planned $2.3 million non-renounceable rights issue.
The terms of the capital raise include the issue of 1 fully paid ordinary share for every 3 shares held by shareholders registered at the record date at an issue price of $0.14 per new share, which represents a 12.5% discount to the market price and 27.1% discount to the 20-day volume weighted average price (VWAP) of Osmond shares. Veritas Securities will act as Lead Manager in respect of any shortfall under the rights issue
Speaking on the acquisition, Osmond Resources Executive Director Andrew Shearer says: “In the context of the opportunity to be a part of the transition to new clean energy economies, the acquisition of the Salt Wells lithium-borate Project offers a tremendous prospect for all Osmond shareholders.
“…the acquisition of the Salt Wells lithium-borate Project offers a tremendous prospect for all Osmond shareholders.”
Not only is the project located in Nevada, which is considered one of the most attractive mining jurisdictions in the world, but the deal terms allow us to direct all our expenditure into exploration.
We now plan to move quickly into assessing existing exploration results, which will shape an exploration plan, with the target to commence on-ground activities and a maiden drilling program in the second half of CY2023.”
Additionally, Osmond states it will grant 5E the first right of refusal as its exclusive sales and marketing agent for the sale of borate produced from the project.
Osmond Resources is an ASX-listed exploration and development company focused on lithium, boron, gold, and base metals discoveries within projects located in the US and Australia.
The Salt Wells project is located close to the city of Reno in the state of Nevada and lies within proximity to major highways. The project comprises about 276 mineral claims covering an area of 36km-square, with surface salt samples in the northern area recording up to 810ppm lithium and 1% boron.
Write to Adam Drought at Mining.com.au
Images: Osmond Resources Ltd
