Zenith Minerals (ASX:ZNC) and its wholly owned subsidiary, Reel Min, have signed a binding but conditional agreement that grants unlisted company WA Rare Earths (WRE) the option to acquire an 80% interest in a rare earth element (REE) project portfolio held by Zenith.
Under the divestment terms and subject to certain conditions, Zenith says it will receive $2 million worth of fully paid ordinary shares in the capital of WRE, as of the completion of an initial public offering (IPO). Zenith will also retain a 20% free carried interest in the REE portfolio until WRE announces a Bankable Feasibility Study (BFS) on any portion of the portfolio.
The company reports until either the settlement or termination of the agreement, WRE will be responsible for the administration and maintenance of the REE portfolio and must comply with all laws, government regulations, and conditions of the REE portfolio, as well as meet all rents, rates, and any minimum annual expenditure requirements.
Other conditions of the divestment include the satisfaction of legal and technical due diligence to be conducted by WRE on the portfolio, as well as a successful listing on the ASX within 8 months from 5 May 2023.
Zenith notes the 4 projects that comprise the REE portfolio include a total of 6 granted exploration licences and 2 exploration licence applications, each with ‘strong’ potential to host ‘significant’ clay-hosted REE mineralisation. It is reported each of these tenements contains or adjoins areas containing ‘strongly’ anomalous REE surface samples or drill results.
The company also notes historical exploration activity on the portfolio, including surface sampling and minor drilling, returned peak values up to 1832 parts per million (ppm) total rare earth oxide (TREO), whilst limited aircore (AC) drilling returned light REE results up to 1,140ppm cerium oxide + lanthanum oxide.
Additionally, Zenith has completed a program of surface sampling across the granted tenure at the Merredin Project, with samples expected to be provided to WRE as part of the transaction, allowing it to get a head start on the exploration and evaluation of the REE portfolio.
With the binding agreement between both parties now signed, Zenith Minerals announces the tenure adjoining Merredin is currently the subject of REE exploration by competitor companies including Moho Resources (ASX:MOH) and White Cliff Minerals (ASX:WCM)
Addressing the divestment and JV, Zenith Minerals Executive Chairman David Ledger says: “The company is pleased to be working with the WRE team to provide Zenith shareholders additional exposure to the critical minerals market, with a focus on Western Australian REE exploration assets.
“We look forward to WRE completing this transaction and advancing these prospective REE projects at a time of considerable interest in this sector”
We look forward to WRE completing this transaction and advancing these prospective REE projects at a time of considerable interest in this sector. The deal allows the Zenith technical team to remain focused on exploring and expanding its core lithium portfolio and the advancement of its highly prospective gold projects.”
Zenith Minerals is an ASX-listed exploration company leveraged to the increasing global demand for metals critical to the production processes of new energy industrial sectors. The company currently has 3 lithium projects all located in Western Australia, with 2 of the projects, Split Rocks and Waratah Well, being explored under terms of a joint venture (JV) between Zenith and EV Metals Group (EVM).
Images: Zenith Minerals Ltd
