Kali Metals Ltd (ASX:KM1) has skyrocketed after global lithium giant SQM (NYSE:SQM) agreed to expand the area of an existing lithium joint venture in Western Australia’s Pilbara region and amend the terms of an earn-in agreement.
As part of the expanded JV, Kali has entered into binding transaction documentation to acquire additional strategic Pilbara tenements at DOM’s Hill and Pear Creek.
DOM’s Hill now includes Exploration Licence Applications E45/6646 and E45/6647 while Pear Creek now comprises Exploration Licence E45/6457.
Additional expenditure
The earn-in has been amended to include an additional A$1 million of expenditure by SQM (NYSE:SQM) by December 15, 2026, taking total expenditure to A$4.25 million to earn a 50% interest in the expanded JV tenements.
SQM will also spend a minimum of $500,000 on exploration by December 15, 2025, to retain its 30% interest in Kali’s DOM’s Hill and Pear Creek tenements.
Shares higher
Recognising the significance of SQM's increased commitment, investors have driven Kali Metals shares as much as 135% higher in ASX trading to A$0.27.
Kali Metals managing director Paul Adams said: “Kali is delighted to secure E45/6646, E45/6647 and E45/6457, all of which are strategically placed to allow Kali to expand its exploration plans in the highly prospective lithium region of the Pilbara.
"As flagged in its prospectus, the company has been assessing and reviewing a number of opportunities to expand its portfolio of assets and is pleased to be able to execute these agreements.
"This acquisition will increase our Pilbara lithium footprint and the potential of delivering value through the discovery of a lithium resource in the Pilbara.
Cost synergies
Given the contiguousness of the new tenements to Kali’s existing Pilbara tenure, in particular its DOM’s Hill and Pear Creek project, the company says it is in a great position to capitalise on cost synergies and efficiencies to streamline its exploration in this highly prospective lithium region.
The new tenements at DOM’s Hill and Pear Creek increase the company’s landholding in the Pilbara region described as the 'Land of the Lithium Giants', by around 129 square kilometres.
Kali Metals JV with SQM is in a highly prospective lithium region with the Pilbara.
In lithium region
The Pilbara projects, including DOM’s Hill and Pear Creek along with Kali’s 100%-owned Marble Bar Project, are east of world-class lithium deposits Pilgangoora and Wodgina.
ELAs E45/6646 and E45/6647 are contiguous to the southwest and east of Kali’s DOM’s Hill Project.
As part of preliminary due diligence, Kali completed a desktop review to evaluate the lithium prospectivity of the additional tenements, which host a large volume of Aplite rock, indicating potential as a favourable geological setting for pegmatite emplacement.
Kali is acquiring the new DOM’s Hill tenements from major shareholder Kalamazoo Resources Ltd (ASX:KZR) for cash consideration of $100,000 + GST.
EL E45/6457 is contiguous to the south of Kali’s existing Pear Creek Project and is being acquired from Kalamazoo for $20,000 + GST.
Kali’s preliminary due diligence on E45/64567 suggests further exploration to test lithium mineralisation at this tenement is warranted.
“Successful relationship”
The earn-in with SQM has been amended with the new tenements to be incorporated into the joint venture.
It now includes:
- SQM to spend $500,000 on exploration by December 15, 2025, to retain its 30% interest in Kali’s DOM’s Hill and Pear Creek tenements;
- Increased $1,000,000 commitment, now $4,250,000 by December 15, 2026, to earn 50% interest in relevant tenements; and
- Kali to retain 100% ownership of Marble Bar Project.
"We are also pleased to have renegotiated the terms of our earn-in agreement with SQM to not only include these new tenements but also increase the expenditure commitment for SQM’s 50% earn-in right, by $1 million.
"Kali has enjoyed a successful working relationship with SQM in the Pilbara and we look forward to exploring with SQM on our new and existing tenements.”
Marble Bar
The Marble Bar tenements are to be retained 100% by Kali under the new terms of the earn-in agreement. Kali is excited about the lithium potential, with the tenements located due south of Archer lithium deposit.
Previously, a 1.4-kilometre-long LCT pegmatite outcrop was located by Kalamazoo Resources prior to the company’s official admission to the ASX in January 2024, with the spodumene-lepidolite mineralogy confirmed in thin sections.
The main pegmatite hosts lithium mineralisation up to 2.81% Li2O5.