The world’s second-biggest diversified miner Rio Tinto is throwing its weight behind Australian junior Charger Metals in its search for lithium in the Goldfields, a region that has been attracting the attention of those hunting for lithium assets.

Rio Tinto has entered into a binding farm-in agreement with Charger for the Lake Johnston lithium project in the Yilgarn of Western Australia.

The farm-in agreement will see Rio Tinto potentially spending up to A$42.5-million to earn up to a 75% interest in the Lake Johnston project.

“The largely unexplored Lake Johnston greenstone belt now hosts multiple spodumene discoveries and with the recent focus and increasing exploration activity could evolve into a prominent lithium province,” said Charger chairperson Adrian Griffin.

Lake Johnston is about 70 km east of the large Early Grey (Mount Holland) lithium project, which is under development by an SQM and Wesfarmers joint venture. Mount Holland is understood to be one of the biggest hard-rock lithium projects in Australia, with the ore reserves for the Earl Grey deposit estimated at 189-million tonnes at 1.5%.

Charger MD Aidan Platel said the agreement with Ro Tinto was an "excellent" outcome for shareholders, reaffirming the company’s belief that the Lake Johnston project had the potential to host a large-scale lithium deposit.

However, the market did not reflect Platel's optimism about the transaction, with the company's stock falling by 26% on Monday to A$0.28 a share.

Rio Tinto’s strategy is to grow in lithium, a key ingredient for the batteries used in electric vehicles. Its CEO, Jakob Stausholm, said in August that the company was “looking at a number of opportunities” in the lithium space.

According to the Australian Financial Review, Rio Tinto has racked up exploration tenements spanning more than 145 000 ha in key jurisdictions. The newspaper reports that Rio Tinto has claims covering 61 000 ha close to the Kathleen Valley lithium project being developed by Liontown Resources. It is also shoring up almost 46 000 ha of exploration ground directly north and to the southeast of the Mt Ida lithium project owned by Delta Lithium.

Over the past year, lithium prices have experienced a decline following the influx of new supply from Australia. Concurrently, as certain EV manufacturers reassess their expansion strategies, buyers have actively reduced their inventories, contributing to the overall downward trend in lithium prices.