Delta Lithium looking to grow Yinnetharra tenure with strategic deals, eyes major lithium hub

Delta Lithium (ASX: DLI) has secured two farm-in agreements to grow the prospective tenure at its Yinnetharra lithium project in Western Australia’s Gascoyne region and boost its equity in the area by 30.5%.

The company has signed deals with Voltaic Strategic Resources (ASX: VSR) and Reach Resources (ASX: RR1) requiring an upfront payment of $4.5 million to lock in an additional 413 square kilometres for a new total regional acreage of 1769 sq km.

The combined land package is expected to significantly improve the potential for a long-life lithium operation in the Gascoyne and provide Delta with important potential growth avenues for the future.

Delta said a dominant footprint in the region increases the likelihood of a regional-scale project being discovered and developed.

Voltaic joint venture

Delta has signed a $12m farm-in and joint venture deal with Voltaic over the 243 sq km Ti Tree lithium project, where high-density pegmatite occurrences were identified at the Morpheus target last year.

Under the terms of the agreement, Delta will earn an 80% interest in the project through a two-stage earn-in arrangement over four years.

It is expected to expand the potential and scale of the Yinnetharra project, where Delta has confirmed a resource of 26 million tonnes grading 1% lithium oxide.

Ti Tree overlays an interpreted prospective corridor of lithium-caesium-tantalum (LCT)-bearing pegmatites containing Yinnetharra and the Thirty-Three Supersuite, a belt of granitic plutons (intrusions) shown to be fertile for LCT mineralisation.

It sits within the extensive Leake Springs mafic-sediment package hosting the mineralised pegmatites at Delta’s Malinda lithium deposit, which contains 25.7Mt at 1.0% lithium oxide.

The “transformative” farm-in will expose Voltaic to significant near-term catalysts associated with project development activities and a de-risked pathway to production and cashflow.

It has been structured to ensure Voltaic is well-positioned to share in the benefits of any discovery.

Staggered consideration

Delta will pay a staggered consideration for the Ti Tree farm-in and joint venture deal, starting with an immediate $1.25m cash payment to Voltaic.

The payment will boost Voltaic’s pro-forma cash reserves to $7.25m and allow for “considered and cost-effective exploration” at its Paddys Well and Meekatharra projects as well as a platform to pursue value-accretive acquisitions.

Stage 1 of the farm-in will see Delta earn a 51% interest in the project by spending up to $3m on exploration within the first 24-month period.

Under stage 2, the company will earn an additional 29% interest by spending $6.25m on exploration activities or by delivering a mineral resource estimate of more than 10Mt at 0.8% lithium oxide within three years.

Delta will pay Voltaic a $500,000 payment in cash or stock at the commencement of stage 2 and a further $1m on completion of the stage.

At completion, Voltaic will elect to maintain its 20% by co-contributing or divest to Delta at fair market value.

Good fit

Voltaic chief executive officer Michael Walshe said the Ti Tree farm-in would be a good fit for Yinnetharra.

“Delta has rapidly advanced Yinnetharra, completing more than 115,000 metres of drilling and delivery of a significant maiden resource within just over a year of acquiring it,” he said.

“This effort is ongoing, with extensive exploration and resource definition drilling programs in progress and very ambitious near-term plans to grow the project into a globally significant lithium resource.”

Prospective ground

Delta managing director James Croser said the collaboration would give the company access to additional prospective ground.

“The combined land package significantly boosts the potential for a long-life lithium operation in the region,” he said.

“Both Voltaic and Reach shareholders are poised to directly benefit from Delta’s existing on-site presence at Yinnetharra.”

“We look forward to working with our new partners and delivering on this potential.”

Reach Resources farm-in

Delta’s farm-in agreement with Reach will consolidate its footprint around Yinnetharra.

The agreement covers Reach’s Morrissey Hill and Camel Hill projects across 170 sq km.

Both projects have demonstrated prospectivity indicated by strong lithium soil geochemical anomalies, extensive host stratigraphy and numerous historical mines for lithium-related minerals.

Under the terms of the Reach deal, Delta will make an immediate payment of $3.2m, after which it may earn 51% in Morrissey Hill and Camel Hill by spending $3m on exploration over two years, with at least 50% of expenditure attributed to drilling (stage 1).

Stage 2 will allow Delta to earn a further 29% in the projects to boost its equity to 80% by spending a further $6m over another two years.

Should Delta define a mineral resource estimate during this period which is equal to or greater than 7.5Mt at 0.8% lithium oxide, the company will make a $10m cash or share payment to Reach.

On completion of stage 2, Reach can elect to maintain its 20% interest by co-contributing or dilute its percentage.