Olympio Metals agrees to farm-in with Liontown Resources over WA lithium projects
Olympio’s Mulline and Mulwarrie projects are located in WA’s eastern goldfields, which is an emerging lithium province.
Olympio Metals (ASX: OLY) has agreed to a farm-in arrangement with Liontown Resources (ASX: LTR) over its Mulline and Mulwarrie lithium projects in Western Australia’s eastern goldfields region.
Under the terms of the agreement, Liontown will conduct a geochemical program involving 1,100 soil samples across the projects within the first year before it can progress to a stage one earn-in.
The company must use its “best endeavours” to complete the program within four months, after which point it may decide to withdraw from the agreement with no interest in the projects.
If Liontown elects to continue, it must then spend a minimum $400,000 on exploration over a period of 12 months to earn the right to 51% equity.
Joint venture option
Once Liontown has earned its stage one interest, Olympio can elect to end the farm-in and take up a joint venture option where it will hold 49% equity and Liontown will be manager.
The joint venture agreement will be on standard commercial terms and each party will contribute to their share on a pro rata basis.
If Olympio does not elect to end the farm-in and form a joint venture, Liontown will proceed to a stage twp opportunity which will see it earn an additional 39% interest by sole funding $1 million on exploration within three years from completion of the minimum commitment.
At the end of stage two, Liontown will hold a majority 90% stake in Mulline and Mulwarrie.
At this point, Olympio may again choose to enter into a joint venture agreement and contribute pro rata to the exploration expenditure.
If Olympio opts out of a joint venture, its 10% interest will convert to a 1% gross revenue royalty payable on product sold from the projects.
Liontown will retain the right to buy-back half the royalty by making a $2 million payment to Olympio.
Lithium experience
Olympio managing director Sean Delaney was pleased with the opportunity to partner with a company experienced in lithium discovery and development.
“Mulwarrie and Mulline contain a number of pegmatites which demonstrate the right geology but have not been fully tested we are excited by the plans that Liontown has for the projects,” he said.
“Importantly, we will retain significant exposure to discovery success with the ability to contribute to funding and keeping our equity at 49% once Liontown has completed the stage one farm-in.”
Emerging lithium province
The Mulline and Mulwarrie projects are located in what is believed to be an emerging lithium province, with lithium mineralisation previously identified at Red Dirt Metals’ (ASX: RDT) Mt Ida project, Venus Metals Corporation’s (ASX: VMC) Henderson project and Ora Banda Mining’s (ASX: OBM) Riverina project.
Olympio continues to review historical drilling and mapping data to identify the presence of pegmatites and their potential to contain lithium mineralisation.
In August, the company identified pegmatite intersections across 15 of the 807 drill holes recorded in the database.
These intersections were never assayed for lithium.
Liontown takeover attempt
Earlier this week, Liontown made headlines when it rejected a third takeover attempt by mining giant Albemarle Corporation.
Liontown said the proposed acquisition price of $2.50 per share for an indicative market capitalisation of $5.5 billion undervalued the company.
The proposal marked the third time Albemarle has tried to buy out the emerging battery metals producer.
In October, Liontown rejected an indicative takeover offer priced at $2.20 per share and earlier this month, also rejected an offer at $2.35 per share.