Force Commodities (ASX: 4CE) has inked a binding deal to farm into up to 75% of the Kitotolo West lithium prospect by paying vendor Walni Mineral Company SARL US$321,605 (A$321,605) and past rights holder African Arch Capital (Mauritius) A$1 million in Force shares.
The 400 square kilometre prospect is located immediately west and is contiguous to Force’s Kitotolo lithium project, with a licence conversion process currently being followed for Kitotolo West.
Force said the project pick-up would allow it to consolidate its presence in a world-class lithium region to over 1000sq km of proven lithium-bearing pegmatites.
The A$34.43 million company’s exploration head James Sullivan said Force was pleased with the agreement and the potential acquisition of a prospective lithium exploration licence.
“This is an important addition to our ground‐holding and, importantly, will allow us to adopt a more holistic view of the exploration potential of the area and formulate an exploration approach which is geared to unlocking the potential of the entire Kitotolo trend and potential parallel structures,” Mr Sullivan said.
The exploration head said with the agreement in place, the company was now focused on preparations for the 16,000m phase one drilling campaign at its Kitotolo lithium project, to be undertaken by AVZ Minerals’ (ASX: AVZ) Manono contractor Equity Drilling.
Next steps at Kitotolo West
Force will complete its legal and technical due diligence process over the next 60 days. Once due diligence is complete, a formal joint venture will be executed as well as any necessary regulatory approvals.
WAMICO will take an initial 35% stake in the new joint venture, while Force will hold 65%, with no interest going to AAC, which has relinquished its stake.
Force will fund a minimum US$1 million (A$1.29 million) of exploration expenditure over the next 12 months and additional exploration expenditures of US$1 million for the following two years.
If the company wants to up its stake to 75%, it can issue WAMICO an extra US$500,000 of Force ordinary shares at any time before a decision to mine.
Force securities were up 6.1% to A$0.087 by late afternoon.