Hawkstone Mining derisks USA Lithium takeover terms

Hawkstone Mining ASX HWK USA Lithium acquisition Big Sandy Clay lithium project
Hawkstone Mining has mobilised a drill rig to its Big Sandy Clay lithium project with exploration to begin immediately.

Hawkstone Mining (ASX: HWK) has emerged from a trading halt with news it has revised the terms of its planned 100% takeover of USA Lithium, which owns two lithium projects in the US.

The news sparked Hawkstone’s share price to rocket more than 22% to reach A$0.027 in late afternoon trade.

Under the revised terms, Hawkstone will pay USA Lithium vendors A$250,000 in cash and issue 250 million shares via two stages.

The second 125 million share issue is subject to Hawkstone defining an inferred resource at Big Sand of at least 30 million tonnes grading at a minimum of 2,000 parts per million lithium.

However, the deal remains subject to shareholder and regulatory approvals, as well as Hawkstone drumming up A$2.75 million in a capital raising.

“Hawkstone is extremely pleased to have been able to agree revised terms for the acquisition of USA Lithium and looks forward to rapidly advancing the exploration program at Big Sandy and Lordsburg,” Hawkstone director Oonagh Malone said.

“The board considers the revised terms significantly derisk the acquisition for Hawkstone shareholders as 50% of the consideration is now contingent on the announcement of a 30Mt inferred resource at Big Sandy,” Ms Malone added.

Big Sandy Clay

USA Lithium’s projects include Big Sandy Clay in Arizona and Lordsburg in New Mexico.

Big Sandy Clay encompasses about 20.9 square kilometres of granted Bureau of Land Management claims. A further 53 claims covering 4.9sq km were also recently pegged.

According to Hawkstone, Big Sandy Clay has returned high-grade assays from surface soil sampling and the company plans to kick-off a diamond drilling program immediately.

In the first exploration campaign at the project, 201 samples were collated and returned up to 2,930ppm lithium (0.293%).

A further eight auger holes were drilled, with seven assaying above 900ppm lithium (0.09%) and up to 3,370ppm lithium (0.337%).

Preliminary metallurgical test work has noted the mineralisation is amenable to acid leach process, with further analysis underway.

The project is 960km by sealed highway from Tesla’s gigafactory and Hawkstone will investigate developing a large-scale open pit operation with a simple flowsheet.

Lordsburg

Meanwhile, the Lordsburg lithium brine project comprises 28.7sq km and has had no modern exploration.

Surface sampling has uncovered lithium concentrations of 160ppm.

Board shuffle

As part the acquisition, Paul Lloyd will step up as managing director of Hawkstone and USA Lithium will be able to nominate another director to the board.

Greg Smith has been appointed as chief technical officer to head up exploration across the two new assets.

“Following fieldwork undertaken by USA Lithium over the past three months and the recent Bureau of Land Management claim approvals, USA Lithium is about to commence an exciting 16-hole diamond drilling program at Big Sandy to be led by Greg Smith,” Ms Malone said.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for numerous industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has also covered a myriad of small and large cap ASX and dual-listed stocks.