PERTH (miningweekly.com) – ASX-listed Lithium Australia has struck a deal with fellow-listed Charger Metals to divest of its remaining 30% stake in the Lake Johnston lithium project, in Western Australia.

The agreement also included Lithium Australia’s remaining 30% interest in the contractual rights to the lithium in the tenements comprising the Lake Johnston project.

Under the terms of the agreement, Charger will issue Lithium Australia with seven-million fully paid ordinary shares, valued at A$2.9-million based on Charger’s previous closing price. With Lithium Australia already holding a 15.5% interest in Charger, this transaction would increase its stake in Charger to 24%.

As part of the acquisition agreement, Charger has granted Lithium Australia a conditional first right of refusal over lithium produced at the tenements. The first right of refusal covers lithium product equal to the lower end of 30% of the lithium produced on the tenements for the term of the agreement reached for the offtake, should a binding agreement be reached, or the lithium product required by Lithium Australia to produce lithium metal phosphate through a commercial facility in which Lithium Australia has an ownership interest of 25% or more.

To qualify for the first right of refusal, Lithium Australia would need to make a final investment decision to construct a commercial facility to produce lithium metal phosphate cathode powders, before the end of 2029.

“Our primary focus areas are the growth of our battery recycling division and commercialisation of lithium ferro phosphate (LFP) cathode powders. A key risk for LFP production is the availability of lithium chemicals, which have the potential to become scarce as demand increases for electric vehicles in the future. Importantly, this acquisition agreement maintains the company’s rights for lithium chemicals from the Lake Johnston lithium project, defined under the original acquisition and joint venture agreement,” said Lithium Australia CEO Simon Linge.

“Converting the prior investment into listed equity ensures that any upside generated by Charger for its Lake Johnston, Bynoe and Coates projects can be more readily realised should there be an opportunity to advance a core project of the company.”

Charger for its part on Tuesday said that the transaction complemented the company’s recent consolidation in the Lake Johnston greenstone belt.

The company is currently drilling a 40-hole programme at the Medcalf spodumene discovery at Lake Johnston.