Aim-listed Firering Strategic Minerals has entered into a binding option agreement with ASX-listed Australasian Metals (A8G) pursuant to which Firering has granted A8G an exclusive 90-day option to acquire the majority of Firering's interests in the Atex and Alliance lithium/tantalum projects, in Côte d'Ivoire, in exchange for a total cash consideration of up to A$1.5-million, or about £790 000.

Firering has granted A8G an exclusive option to acquire a 75% interest in Atex Mining Resources, the holder of the Atex licence; a 51% interest in Alliance Minerals Corporation, the holder of the Alliance licence; and the option to acquire an additional 29% interest in Alliance Minerals.

On completion, incorporated joint ventures (JVs) will be formed in respect of both projects, with A8G as operator.

Firering would retain a 15% free-carried interest in the Atex project, with no obligation to fund exploration or development until the later of a final investment decision being made, a minimum of $5-million of qualifying expenditure having been incurred by A8G, and all obligations under an agreed exploration plan having been satisfied.

During the free-carry period, A8G retains an option to buy out Firering's retained interests for A$5-million – a minimum of A$2.5-million in cash, with the balance in A8G shares – together with the grant of a 1% royalty in favour of Firering on revenues from the projects, subject to defined deductions including mining and processing costs.

The royalty may, in turn, be acquired by A8G for a further A$5-million, providing additional potential upside for Firering shareholders. Neither the buyout option nor the royalty buyout is certain to be exercised.

During the free-carry period, A8G will be solely responsible for funding 100% of all costs associated with the projects, including exploration, permitting, community obligations and licence maintenance.

Firering says its JV interest will not be subject to dilution, cash call or forfeiture during this period.

A8G will also be required to provide Firering with comprehensive quarterly data packs and ongoing access to all technical, financial and regulatory information relating to the projects.

The net proceeds under the agreement will be applied towards the group's general working capital, the company's obligations under the outstanding shareholder bridge loan notes and continued support of the company's primary value driver, the Limeco quicklime project, in Zambia.

Firering chairperson and interim CEO Youval Rasin says this agreement represents a positive development for Firering and its shareholders, providing near-term cash proceeds from the company’s noncore Côte d'Ivoire lithium/tantalum assets, while retaining a 15% free-carried interest and royalty.

“The projects remain highly prospective and we believe A8G’s commitment to fund their exploration, and development provides a good route to unlocking their potential.

“The proceeds will further strengthen our financial position as we continue to focus on Limeco, our primary value driver. With our interest in Limeco now increased to 45%, our focus is on its continued operational ramp-up, while we retain exposure to the Côte d'Ivoire assets through our free-carried interest and royalty.”

Firering notes that the projects are noncore to the group's current strategy, which is focused on the ramp-up of the Limeco quicklime operation in Zambia, in which Firering holds a 45% interest.

The group has not funded material exploration expenditure on the projects since the Ricca earn-in arrangements were terminated.

Firering explains that the option is exercisable at A8G's sole discretion and there can be no certainty that it will be exercised or that the disposal will complete.

The company notes that exercise of the option by A8G and completion of the acquisition are subject to a number of conditions precedent, including receipt of all necessary legal, regulatory, shareholder and third-party approvals, including approval of the Minister of Mines, Petroleum and Energy of the Republic of Côte d'Ivoire and, if required, Firering shareholders’ approval.