PERTH (miningweekly.com) – Gold and lithium explorer Kalamazoo Resources on Monday announced a number of transactions that would result in the birth of a new critical minerals explorer.

The ASX-listed Kalamazoo has announced plans to spin out its Australian lithium projects into a new ASX-listed exploration company called Kali Metals, through a demerger and concurrent initial public offering (IPO).

The company has also struck an agreement with TSX-listed gold miner Karora Resources, under which Karora will vend its highly prospective mineral rights across its projects in Kalgoorlie into Kali, during the IPO. Kalamazoo will own 55% of the newly minted lithium explorer, while Karora will own the remaining 45%, prior to the IPO.

The IPO is expected to raise between A$10-million and A$12-million to fund exploration and drilling plans.

“With Kalamazoo's primary focus on gold, we have contemplated spinning out our Pilbara and Lachlan Fold Belt lithium projects for quite some time now. When the opportunity arose to join with Karora, into what we consider will be a significant critical minerals exploration company in Australia, the rationale was compelling,” said Kalamazoo chairperson and CEO Luke Reinehr.

“We are delighted to have reached an agreement with Karora that will see our lithium portfolio combined with its highly prospective tenement package located in a Tier 1 lithium mining jurisdiction. The spin-out will result in the establishment of Kali as a well-funded ASX-listed lithium explorer, with an unrivaled portfolio of assets located in the hottest hard-rock lithium regions, not just in Australia, but globally.

“The spin-out of Kali will provide our shareholders with ongoing exposure to these expanded assets and strategy via an initial in-specie distribution of its shares in Kali. In addition, Kalamazoo shareholders will have the right to subscribe for additional shares, should they wish to participate in Kali’s IPO on a priority entitlement basis.”

Kali’s lithium exploration tenure will comprise Kalamazoo’s Marble Bar and DOM’s Hill lithium projects in the Pilbara, where exploration is currently being undertaken in a joint venture with Chilean lithium producer Sociedad Química y Minera de Chile S.A, as well as the lithium mineral rights granted across Kalamazoo’s Jingellic and Tallangatta lithium projects, in New South Wales and Victoria.

The company will also hold the lithium mineral rights over a significant portion of Karora’s Higginsville gold tenement in Western Australia.

In total, the newly formed company’s lithium and critical mineral tenure will cover 3 833 km².

“After exploring different potential ways to fully assess and explore the lithium potential of Karora’s Higginsville tenements, I am confident we have found the best solution to move forward. Working with Kalamazoo, we have assembled a top-notch management group with an excellent track record of building value to give Kali a running start,” said Karora chairperson and CEO Paul Huet.

“Furthermore, it allows Karora management to stay focused on our gold and nickel production growth, while giving Karora shareholders near-term exposure to the lithium exploration on our Higginsville tenements in combination with Kalamazoo’s lithium projects in Western Australia, New South Wales and Victoria.

“Together, these assets under the Kali banner form a highly prospective exploration vehicle in the exciting lithium sector playing a critical role in the global energy transition. We look forward to participating in the enhanced combined success of the newly formed Kali Metals.”

Kalamazoo’s demerger of its lithium assets is subject to final board, regulatory and shareholder approval, with general meetings planned for early August. If all goes well, Kali is expected to start share trading on the ASX by early September.