PERTH (miningweekly.com) – ASX-listed gold miner Ramelius Resources has struck a A$30.25-million deal with fellow-listed Liontown Resources over the lithium royalty at the Kathleen Valley lithium project.
The royalty was granted to Ramelius when it disposed of the Kathleen Valley lithium/tantalum project to Liontown in 2016, and comprised both a production component of A$0.50/t of ore mined and a sales component of 1% of the gross sales of the ore.
“When we divested the Lithium project to Liontown in 2016 we did so by accepting a royalty in a commodity that, at the time, was only just beginning to attract market attention. Liontown have done a sensational job in developing the Kathleen Valley project to the long life, world class scale that it is today. We wish them every success in bringing the project through to development over the coming years,” said Ramelius MD Mark Zeptner.
“We are very fortunate to have been able to benefit from the battery minerals thematic and having considered this asset as noncore for some time, we felt that now was the time to exit and use the funds to support our gold growth story.”
Liontown told shareholders that the opportunity to remove the financial obligations created by the Kathleen Valley royalty aligns clearly with Liontown's stated objective of reducing the operating costs of the project, while also optimising its overall economic profile.
The company said on Monday that the termination of the royalty was in the best interests of shareholders and, at present, was the most efficient way to optimise the project’s future operating costs.
“The termination of this royalty is expected to enhance the net present value of Kathleen Valley and lower its position on the cost curve. It will further cement the tier-1 credentials of the Kathleen Valley project at a time when the outlook for the lithium market continues to improve. This is a value-accretive opportunity which removes a source of value leakage for the project and lowers future operating costs,” Liontown MD Tony Ottaviano said.
“This supports our ongoing strategy of improving the project’s financial metrics and enhancing its attractiveness and optionality as the only large, uncommitted, pre-development phase hard rock lithium asset in the developed world.”
The termination payment will be settled from existing cash reserves which were boosted by the recent highly successful capital raising. The company remains well funded, with approximately A$33-million of cash and liquid assets available to continue to accelerate the development of the Kathleen Valley project, post the settlement with Ramelius.