PERTH (miningweekly.com) – ASX-listed Poseidon Nickel and fellow-listed Lithium Australia have inked a lithium exploration and processing memorandum of understanding (MoU) over the Lake Johnston project, in Western Australia.

The parties are planning to explore for lithium-hosted pegmatites on tenements held by both firms at Lake Johnston and Ravensthorpe, with the combined tenement package covering some 1 000 km².

The companies will also assess the viability of using Poseidon’s 1.5-million-tonne-a-year Lake Johnston concentrator, which is currently on care and maintenance, to process lithium ores and produce a saleable lithium concentrate and downstream lithium chemical production.

Poseidon COO Michael Rodriguez said on Wednesday that the MoU with Lithium Australia represented an opportunity to combine resources, reduce costs and improve the prospectivity for discovering a commercial lithium deposit on the combined tenement package.

“This is consistent with the company’s stated strategy of establishing Lake Johnston, with all of its existing plant and infrastructure, as a central lithium processing hub.”

Poseidon will retain ownership of all the nickel, copper and cobalt rights at the Lake Johnston project, with the company saying it would continue to monitor the improved sentiment returning to the nickel market, and that it would retain flexibility to process nickel through the secondary milling circuit at Lake Johnston.

Meanwhile, Lithium Australia MD Adrian Griffin told shareholders that the transaction with Poseidon could result in both companies capitalising on the value-add that could be achieved by processing third-party ore through to lithium chemical and cathode materials by applying Lithium Australia’s technologies.

“Lithium Australia has great confidence in the resource potential of the Lake Johnston area, and indeed Western Australia’s broader Dundas region. We are striving towards reduced exploration risk, access to ore concentration facilities and access to third party ore sources to feed a lithium chemical plant based on our 100%-owned SiLeach process and downstream into a VSPC-based cathode manufacturing facility.

“Together with Poseidon, we hope to take a very cost effective first step into the lithium-ion battery manufacturing chain.”