Lithium Australia Ltd (ASX:LIT, OTC:LMMFF) has surged on taking a landmark step forward in the lithium extraction space with a joint development agreement with leading ASX-listed mining company Mineral Resources Ltd (ASX:MIN).
The strategic partnership aims to advance Lithium Australia's patented LieNA® technology, a method that could potentially enhance lithium extraction yields by up to 50% above current market performance.
Under the agreement, MinRes will provide financial backing of up to A$4.5 million for the development and operation of a pilot plant and an engineering study for a demonstration plant and will supply the necessary raw materials for the extraction process.
Lithium Australia, on the other hand, will contribute its LieNA technology and oversee the pilot plant's production process.
LIT shares have risen as much as 60.61% in ASX trade this morning to $0.053.
New income stream
The funding arrangements for the joint venture include a A$4.5 million convertible note issued to MinRes.
Upon successful completion of the initial stage activities, the convertible note will convert to equity in a new joint venture, solidifying the partnership between Lithium Australia and MinRes.
Lithium Australia and MinRes will each have a 50% interest in the JV entity, which will wholly own the LieNA technology going forward.
The joint venture plans to license the technology to third parties, potentially opening up new revenue streams for Lithium Australia.
The target headline gross product royalty rate of 8% could significantly expand the company's addressable market as it captures fees on all tonnage processed through mines utilising LieNA.
Additionally, with MinRes being a prominent lithium producer, the partnership opens doors to early target jurisdictions for licensing in Western Australia and North America, with the potential to expand further into Europe and Africa.
Technology validated
Lithium Australia chief executive officer Simon Linge said: “We are thrilled by the formation of a new partnership with Mineral Resources, one of Australia’s largest and most prominent mining companies.
“MinRes is the perfect partner to complement our leading lithium extraction technology, given its extensive owned operations and strategic movement downstream into the battery materials sector.
“Securing a development partner is also noted as a significant step within Lithium Australia’s recently released roadmap and serves as a powerful validation of our patented technology.
“We are excited by the future opportunity to license our proven high-value technology to all existing and new lithium mines across Australia and the rest of the world.”
About MinRes
MinRes has a growing world-class portfolio of mining operations across multiple commodities, including lithium and iron ore.
The company has a market capitalisation of about A$13.6 billion and in financial year 2022, recorded revenue of A$3.4 billion and produced more than 450,000 dry metric tonnes of spodumene concentrate for lithium extraction.