TORONTO (miningweekly.com) – Lithium development company Lithium X Energy has agreed to option half of its Clayton Valley South Expansion lithium (CVL) property, which comprised 471 federal placer mining claims, totalling about 3 861 ha, and was located about 50 km south-west of Tonopah, Nevada, to fellow TSX-V-listed North South Petroleum.

The companies on Wednesday announced that they had entered into a binding letter of intent and that North South had paid a nonrefundable deposit of $100 000.

On closing, North South would pay Lithium X $1.5-million, and issue to Lithium X the number of common shares of North South equal to 19.9% of the issued and outstanding shares of North South, upon closing the transaction and a simultaneous financing.

Under the terms of agreement, North South would be required to fund an exploration programme of at least $1-million and complete a National Instrument 43-101 technical report within 18 months of closing.

Should the technical report confirm an inferred resource of a minimum of 300 000 t lithium carbonate equivalent grading at 28 ppm lithium on the property, North South would pay a further $500 000 to Lithium X. Within 36 months of closing, North South would also be required to complete a further Phase 2 minimum $1-million programme, including completing a feasibility study or prefeasiblity study on the property and paying $500 000 to Lithium X.

One condition precedent to closing was that North South would have closed a private placement equity financing for gross proceeds of at least $3-million.

The parties would diligently and in good faith negotiate a definitive agreement to be executed by the parties by no later than May 31, after which the deal would close.

Upon closure, the parties would create a joint Nevada technical committee consisting of Marc Bustin, Paul Matysek, William Randall and Ross McElroy, Lithium X advised.

In February, Lithium X Energy had secured the largest claims holdings in Nevada's prospective Clayton Valley and now held 6 078 ha of land north and south of Albemarle's Silver Peak mine, North America's only lithium producer.

The Western US state of Nevada was playing host to entrepreneurs and junior project developers staking land claims in a bid to get in on the hype created by Tesla Motors’ first $5-billion gigafactory under construction in the state.