Pilbara-focused explorer Kalamazoo Resources (ASX: KZR) has entered an exploration, development and farm-in agreement with one of the world’s largest lithium producers Sociedad Química y Minera de Chile SA (SQM) over two of Kalamazoo’s lithium projects in Western Australia.
The agreement gives Chile-based SQM the right to earn an initial 30% interest in the Pilbara-based DOM’s Hill and Marble Bar projects by sole funding a minimum $12 million in exploration and development over the next four years.
The company will earn up to a maximum 70% in the projects and retain the option to form a joint venture with Kalamazoo after claiming its stake over three stages (30%, 50% and 70%).
Kalamazoo will be the initial manager of the joint venture and will establish a technical advisory committee with SQM to determine exploration activities.
SQM is one of the world’s largest producers of lithium carbonate and lithium hydroxide, and accounted for approximately 19% of global lithium chemicals sales volumes in 2020.
Kalamazoo chairman and chief executive officer Luke Reinehr welcomed the partnership with SQM.
“Although it is an early stage project, DOM’s Hill hosts one of the closest geologic analogues to the nearby Pilgangoora and Wodgina lithium mines [and] is a strong validation that one of the world’s major lithium producers shares our confidence in the potential to discover another large-scale lithium deposit in the Pilbara,” he said.
“This joint venture provides us with the opportunity to tap into SQM’s lithium expertise and participate in a very focused exploration and development program alongside our portfolio of gold projects in Victoria.”
DOM’s Hill history
Although numerous gold nuggets have been previously discovered in the DOM’s Hill area, Mr Reinehr said there had been no historic exploration for lithium at the site despite its proximity to world-class deposits at Pilgangoora (owned by Pilbara Minerals, ASX: PLS) and Wodgina (Mineral Resources ASX: MIN).
The lithium potential of DOM’s Hill was highlighted during a recent project technical review which concluded that the geology was analogous to these deposits.
Marble Bar potential
A technical review of Kalamazoo’s Marble Bar tenements has also revealed lithium potential due to its proximity to the Moolyella tin and tantalum alluvial field, which includes known cassiterite- bearing pegmatites.
Although the project has not been subject to modern lithium exploration, Global Lithium Resources (ASX: GL1) recently announced a maiden inferred resource for the nearby 10.5Mt Archer deposit.
Mr Reinehr said this development provides further confidence of the lithium prospectivity in the immediate region.