Lithium Energy Ltd has acquired a portfolio of tenements in the Musgrave region of Western Australia prospective for rare earth elements (REEs), tantalum and niobium through its purchase of Scarborough Resources Pty Ltd (SCR), a subsidiary of Bentley Capital Limited.
The five exploration licences (EL) total approximately 887 square kilometres are pending grant and are near the WA border with Northern Territory and South Australia.
LEL has undertaken preliminary geological work on the tenements as part of its due diligence and has advised Bentley that it is possible it will not proceed to grant of all of the tenements.
To secure the grant of the tenements, an agreement is required to be entered into with the Native Title holders. Based on the draft mineral exploration agreement negotiated by SCR, this will likely entail a signature payment to the Native Title holders on execution of the agreement.
The consideration received by Bentley for the sale of SCR is an ongoing free-carried royalty interest being a 0.5% Net Smelter Return Royalty on the value of any minerals sold from any of the tenements should at any time in the future a mineral discovery on a tenement be brought into production, together with a reimbursement of $10,000 in expenditure previously incurred by SCR.
Bentley directors confirm that the consideration negotiated with LEL was appropriate in the circumstances and reflects the ‘fair market value’ for SCR/the tenements given they are at the application stage.