Battery minerals explorer Hipo Resources (ASX: HIP) has entered into a joint venture arrangement with Canada’s Crown Mining Corporation to earn a majority stake in a lithium project near AVZ Minerals’ (ASX: AVZ) world-class Manono lithium asset within the Democratic Republic of the Congo.
Hipo will be earning 60% of the Kamola lithium project, which comprises a mining lease and two exploration licences along the prolific Manono and Kitolo pegmatite belt, and is believed to host a significant high-grade lithium resource.
Kamola is close to AVZ’s flagship Manono asset, where AVZ has rapidly firmed up the world’s largest hard rock lithium resource, within a short period.
The initial resource at Manono totals 259.9 million tonnes grading 1.63% lithium for 4.25Mt of contained lithium.
Since the maiden resource was published, AVZ has pulled up yet more record lithium intersections from ongoing drilling at Manono, underlining the region’s potential.
Other projects near Kamola include Force Commodities (ASX: 4CE) tenements, with Force pegging out almost 1,000 square kilometres of lithium-bearing pegmatites through granted licences and licence applications.
Kamola in the DRC
Already an established tin and tantalum producer in the DRC, Crown Mining acquired the Kamola lithium licences in 2008.
Due diligence conducted by Hipo earlier this year confirmed the presence of five structural pegmatites, two of which were tested and confirmed to be lithium-bearing.
The pegmatites will be subject to further delineation work and are slated for maiden drilling in the new year.
Joint venture funding
Under the terms of the joint venture, Hipo will spend $1.38 million on exploration and drilling activities within 12 months after signing the agreement.
The company will also contribute up to $6.8m in exploration and project development costs within the first three years to maintain its 60% equity.
Funding will be advanced on a loan account arrangement with Crown finance, carried through to definitive feasibility stage.
Ahead of the proposed maiden drilling program in 2019, executive chairman Maurice Feilich said Hipo’s technical consultants will conduct an immediate site visit to evaluate surface geology, map known pegmatites and conduct outcrop sampling and pitting.
The company expects to announce results of the site visit before year end.
“Our team will commence [site activities] early next week and we expect it will give us a greater understanding of the project’s potential,” he said.
“[We aim to] discern the nature of lithium mineralisation and the structure of the pegmatite as much as possible, which will allow planning to proceed for a comprehensive drilling program.”
In August, Hipo struck a deal with Canadian lithium processing company St George Eco Mining to enhance development options at Kamola.
Hipo plans to send samples of Kamola ore to St George, which has agreed to provide exclusive research and development services utilising products, extraction methods and proprietary technology for the separation, recovery and purification of lithium from identified lithium-bearing pegmatites.
The research package will consider options for the development of innovative lithium recovering techniques to optimise the project’s economics.
Also in August, Hipo agreed to acquire up to an initial 35% holding through an equity earn-in of Gibraltar-based Next Battery, which is engaged in the development of a new generation, higher-performance, lithium-ion prototype.
The proprietary process significantly increases the surface area of metal oxides in a battery’s cathode.
This enables cathodes which are ultra-porous and lithium-infused within a nano-structured surface to promote faster lithium-ion transport and electron movement in a more energy-dense structure.
Laboratory tests have shown the new-style batteries can more than double the specific energy of the best commercial lithium-ion batteries on the current market.
Under the terms of the agreement, Hipo has the right to earn 25% equity in Next by spending approximately $687,000 on an agreed budget for the development of the battery technology.
An added 10% equity can be earned through an additional $1.37 million investment.
Hipo will also issue 10 million shares to Next Battery (or its nominee) in two tranches – 5 million shares will be issued where a prototype battery demonstrates a minimum 50% increase in energy compared to the current Tesla battery model, while the remaining 5 million will be issued on demonstration of a minimum 100% increase.
Mr Feilich said the earn-in with Next Battery is a “game changer” which allows Hipo to capitalise on the fast growing lithium-ion battery market.
“Having this initial investment [in Next Battery] gives us meaningful exposure to an emerging technology being developed by a credible and trusted team,” he said.
“It is a unique opportunity for us to become involved in one of the biggest growth industries in the world.”
At mid-afternoon, shares in Hipo Resources were trading 7.69% higher at $0.014.