Rio Tinto has signed a farm-in agreement at the Lake Johnston lithium project in the Goldfields, a region swiftly emerging as the new frontline in the ongoing lithium land grab.
Australian Securities Exchange-listed Charger Metals on Monday announced it signed an agreement with Lithium Australia to purchase the 30 per cent of Lake Johnston it does not already own for $2 million.
In tandem with this, Charger entered into a farm-in agreement with Rio Tinto which will see the mining giant pay Charger $1.7m upfront and outlay $3m in exploration within the first 12 months of the deal.
Rio Tinto can then earn up to 75 per cent in Lake Johnston — located west of Norseman — by sole funding $42.5m in exploration expenditure and cash payments to Charger, or by completing a definitive feasibility study on the project.
Charger shareholders were seemingly hoping for a better deal, as shares in the junior plummeted 23.7 per cent to trade at 29¢ by 9am.
In recent months Rio has been staking its claim to vast amounts of exploration ground adjacent to Delta Lithium’s Mt Ida lithium project in the Goldfields. Mineral Resources is Delta’s largest shareholder and MinRes boss Chris Ellison chairs Delta.
Last week Mr Ellison said the Goldfields was the most prospective ground in the world for hard rock lithium.
“There’s certainly a lot [of lithium] down there to be found, it’s really well under-explored,” Mr Ellison said on Thursday.
“All of the gold companies sort of sit on the ground down there and are really only interested in gold.
“About the middle of next year we will have probably wrapped up gathering up as much rock as we can.”
MinRes earlier this month got its hands on lithium and base metals rights at Pantoro’s flagship project in the Goldfields, in a deal worth up to $60m, as well as finalising the acquisition of the nearby Bald Hill lithium mine from receivers.
Rio Tinto has also been hoovering up exploration ground near Liontown Resources’ Kathleen Valley lithium project near Leinster in the northern Goldfields. Mining billionaire Gina Rinehart has a 19.9 per cent stake in Liontown after spoiling a $6.6 billion takeover bid for the lithium hopeful from Albemarle.
Despite the frenzy for lithium ground, the price of the battery ingredient continues to languish.
According to S&P Global, the Australian export price for 6 per cent spodumene lithium concentrate fell 3 per cent overnight to $US1600 a tonne.
Over the past three months the price has shed 46.7 per cent.