Galileo Mining Ltd (ASX:GAL, OTC:GLMGF) is trading higher on inking a farm-in and joint venture (JV) agreement with major Australian mining company Mineral Resources Ltd (ASX:MIN) (MinRes) for lithium rights over the Norseman Project in Western Australia.
GAL has agreed to sell 30% of its lithium rights on Norseman tenements in return for A$7.5 million in cash consideration, with A$5 million to be paid within five days of the joint venture agreement’s (JVA) execution.
A further A$2.5 million will be paid within 12 months of the JVA, with Galileo and MinRes forming a JV to explore for lithium at Norseman.
Under the JV, MinRes will fund exploration over four years to the tune of A$15 million, thereby expanding its interest in lithium rights on the tenure to 55% – stage 2 of the JVA.
Investors welcomed the agreement with GAL shares as much as 18.37% higher in early ASX trading to A$0.29.
Excellent lithium potential
“We are excited to add a lithium exploration joint venture to our ongoing exploration programs for platinum group elements (PGEs) and nickel at our Norseman Project,” Galileo Mining managing director Brad Underwood said.
“The Norseman Project has excellent lithium potential and is strategically located in the world’s most prospective region for lithium.
“The project’s outstanding location relative to existing infrastructure provides a shortcut to development for any lithium resources discovered through the joint venture.
“Galileo will benefit from a focused program of lithium exploration by MinRes, one of Australia’s pre-eminent lithium companies, as well as increasing our cash reserves to aggressively pursue other high-value resource discoveries at both our Norseman and Fraser Range projects.
“With A$5 million of additional funding to be received within five days of execution of the agreement, a further A$2.5 million to be received within 12 months and A$10 million in the bank, Galileo is fully funded to undertake all of its planned exploration programs.”
Option to raise stake further
Once Stage 2 of the JVA is complete, MinRes has the option to further raise its stake to 70% by sole funding expenditure through to decision to mine.
At that point, the two companies will enter into a separate mining joint venture agreement on essentially the same terms as the exploration JVA.
Under the agreement, GAL may also elect to contribute to development costs under the Mining JVA or elect to convert its interest into a royalty.
Galileo retains ownership of the project tenements and all rights to nickel, PGEs and all minerals other than those contained within lithium-bearing pegmatites within the Norseman tenure.
Mining Lease 63/671, which hosts the Callisto deposit’s 17.5-million-tonne PGE-nickel resource and retains high prospectivity for further exploration, is not part of the Exploration JVA.