PERTH (miningweekly.com) – ASX-listed Neometals on Tuesday announced that its 70%-held subsidiary Reed Industrial Minerals had completed a deal with fellow-listed Metals X over the Mt Marion lithium project, in Western Australia.

In January this year, the two companies signed a memorandum of understanding that would see Reed lease the lithium mining rights over a portion of its Hampton Area Location 53, which is adjacent to the Mt Marion lithium project, for an initial period of ten years, at a fee of A$90 000 a year.

The duration of the lease could be extended twice, both for a period of five years.

Furthermore, Reed would be allowed to mine and extract lithium ores from the lease area, and store waste material within the project area. Reed would be required to pay a A$2/t royalty on all ore mined and processed from the lease area, as well as a 1% net smelter royalty on the sale of any downstream products generated from the lease area.

Metals X had also agreed to sell Reed an adjoining tenement and associated infrastructure for A$250 000, with Metals X retaining the rights to access and mine gold from the tenement area, and pre-emptive rights over any upstream or downstream sale of the tenement.

With the completion of the transaction, Reed would be allowed to explore and develop extensions of the No 2 and No 2 West lithium deposits, located at the northern boundary of the Mt Marion project, where previous drilling had indicated that lithium mineralisation continued into the newly leased tenements, providing Reed with an opportunity to expand the current resource with further exploration.

In addition, the purchase of the adjoining leases and associated infrastructure was also expected to provide potential tailings storage, optimal waste dump positioning and access to existing heavy haul road, which Neometals MD Chris Reed said would benefit the future development of Mt Marion.

“We are pleased to have completed another step towards transforming Reed into a globally significant lithium concentrate producer and supplier to the lithium ion battery industry.

“The next step in the project’s development plan is to finalise binding offtake agreements, which are well progressed, before we commit to a final investment decision.”