PERTH (miningweekly.com) – ASX-listed General Mining on Tuesday announced that it had revised its transaction with fellow-listed Galaxy Resources over the Mt Cattlin project, in Western Australia.

In February this year, the two companies entered into an agreement giving General Mining the right to operate the Mt Cattlin project for a period of three years. Under that agreement, General Mining was expected to pay a lease fee of A$2.5-million a year to Galaxy, along with a 10% production royalty.

The junior would also have the right to purchase the Mt Cattlin project outright for A$30-million and a 3% net smelter royalty return, at any time during the three-year period.

However, General Mining said the company would now acquire a 50% interest in the Mt Cattlin project for a total consideration of A$25-million.

Under the terms of the new agreement, General Mining would spend an initial A$7-million on the project prior to the start of production, on or before the end of March next year.

The company’s equity interest in the project would start at 14% upon that expenditure, and would increase as the balance of the consideration was paid over three A$6-million installments, due every year from the start of production.

General Mining’s equity interest would increase by 12% upon the payment of each installment.

The company would also act as sole operator and manager of the project, while all care-and-maintenance costs prior to the start of production and revenues after the start of production would be shared equally between the parties.

Furthermore, General Mining would also have the right to earn a 50% stake in Galaxy’s James Bay lithium project, in Canada, by spending $5-million over a three-year period.

General Mining director Michael Fotios said that the amended terms of the transaction would see General Mining rapidly become a rare metal producer with major assets in two major provinces, namely Western Australia and Quebec.

“We are looking to make rapid progress on the Mt Cattlin project at a time of strong interest in the lithium market, with James Bay offering a second development project close to several downstream consumers of lithium raw materials.”

Galaxy CEO Anthony Tse said that the revised deal structure would allow Galaxy to benefit and unlock more value from both its projects over the longer term.

The revised transaction was subject to all the relevant shareholder and regulatory approvals.