PERTH (miningweekly.com) – ASX-listed Pioneer Resources has entered into an option agreement and strategic alliance with TSX-listed International Lithium Corporation (ILC) over the Mavis lithium project, in Ontario.
Under the terms of the agreement, announced on Tuesday, Pioneer had subscribed for C$100 000 units in ILC, at a price of 8c each, comprising one common share and one-half of a transferable common share purchase warrant, which entitled the holder to acquire one common share at an issue price of 12c each, for a period of four years.
In exchange, Pioneer had been granted a three-month exclusivity period to conduct a due diligence on the Mavis project.
On electing to proceed, Pioneer could earn a 51% interest in the project by spending C$1.5-million on exploration activities within a three-year period, and by paying ILC C$375 000, of which half would be cash and half shares, over a three-year period.
Following the first earn-in, ILC would accrue a 1.5% net smelter return royalty, which Pioneer could claw back for C$1.5-million. In addition, an existing 5% royalty over the Fairservice prospect could be purchased for an additional C$1-million.
Pioneer could earn another 29% stake in the project through spending C$8.5-million within a seven-year period, bringing its total spend to C$10-million. After this period, a joint venture (JV) would be formed and the companies would contribute to the project on a pro-rata basis.
If either party diluted to a 15% project equity, it would retire from the JV, and its shareholding would revert to a 1.5% royalty.
The Mavis lithium project covered some 2 624 ha, with spodumene occurring within the Mavis Lake pegmatite group.
Pioneer said on Tuesday that a ground magnetic survey would be conducted, while soil geochemistry had already identified lithium-bearing pegmatites within a 350 ha area. However, much of the remaining 2 274 ha area covered the targeted ‘lithium zone’ and remained unsampled.
Drilling to identify new spodumene occurrences, and to further define the known ones, would also be undertaken.
Meanwhile, Pioneer had raised some A$1.58-million through a share placement, priced at 1c a share, to fund the proposed works programme at Mavis, and to advance the next phase of exploration at its Acra gold project, in Western Australia.
The shares were placed with professional and sophisticated investors.