Lithium Australia Ltd (ASX:LIT, OTC:LMMFF) has signed a binding agreement with Charger Metals NL for the sale of LIT's remaining 30% interest in the Lake Johnston Lithium Project.
Charger will pay A$2 million cash consideration for the 30% stake, which includes a non-refundable exclusivity payment of A$150,000.
LIT will also retain a first right of refusal for offtake of up to 30% of lithium produced at Lake Johnston, as part of a binding agreement for future commercial production of lithium ferro phosphate (LFP), a common battery material.
Charger Metals has also signed a farm-in agreement with Rio Tinto (ASX:RIO) Exploration, under which Rio Tinto can earn up to a 75% interest in the project through exploration expenditure.
Win-win outcome for all
“We are excited by the opportunity to engage with Charger Metals regarding the sale of Lithium Australia’s remaining holding in the Lake Johnston Lithium Project," Lithium Australia CEO and managing director Simon Linge said.
"As a significant shareholder of Charger, we are excited by the partnership between Rio Tinto Limited and Charger and believe this provides a win-win outcome for all.
"The transaction reaffirms our commitment to focusing on our core operations, while aligning the company to its ESG ambitions.
"Lithium Australia also retains optionality to secure any future lithium offtake from successful resource development to support our battery materials business.
"I am excited by our future prospects and believe this transaction will help us to lead and enable the global transition to sustainable electrification.”
Lithium Australia retains a holding of 9.6 million ordinary shares in Charger, allowing the company to maintain upside to Lake Johnston while supporting its strategic transition away from non-core assets while also strengthening LIT's balance sheet.