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Cazaly Resources triggers stock jump with lithium project purchase

Cazaly Resources has agreed to purchase the Sundown lithium project in Canada. Credit: File

Shares in Cazaly Resources jumped nearly 70 per cent today after it entered into a binding agreement to buy the Sundown lithium project in the heart of the James Bay lithium province in Canada.

The company’s share price touched 4.4 cents during intraday trading, lifting from its previous closing price of 2.6 cents last Thursday. There was no trading in the company’s stock last Friday and it had been in a trading halt since Monday, pending its latest announcement.

Sundown covers more than 260 square kilometres in the Canadian province of Quebec and comprises 510 mining claims with little modern exploration completed for lithium at the site.

The operation has more than 200 outcropping pegmatites reported by the Quebec Ministry of Natural Resources, which the company says shows excellent potential for a new hard-rock lithium discovery. The site sits between Allkem’s James Bay deposit with a lithium reserve of 37.2 million tonnes at 1.3 per cent lithium oxide and Patriot Battery Metals’ Corvette lithium discovery, which is host to 70 lithium-bearing pegmatites in a 214sq-km land package.

The latest acquisition adds to Cazaly’s Canadian portfolio after it picked up the Carb Lake rare earths project in the neighbouring province of Ontario last month.

We are extremely pleased to have an exclusive binding agreement to acquire the Sundown lithium project. The project is an excellent addition to our recent Canadian rare earth elements project acquisition, and provides Cazaly with another excellent discovery opportunity, this time for lithium, another critical mineral. Cazaly Resources managing director Tara French

Cazaly has agreed to pay a non-refundable option fee of C$50,000 (AU$56,500) to the unnamed vendors for a two-month exclusivity period to complete due diligence. Once satisfied, the company will pay C$350,000 (AU$395,503) in cash and C$600,000 (AU$678,006) in stock or cash upon execution to hold 25 per cent equity in the project.

At the end of each of the next three years, Cazaly will pay C$250,000 (AU$282,502) in cash and C$750,000 (AU$847,507) in cash or shares to build its equity by 25 per cent annually to reach full ownership by the end of the third year.

The vendors will receive a 2 per cent net smelter royalty with Cazaly retaining an option to buy back 1 per cent for C$1 million (AU$1.13 million).

Once due diligence is completed, the company is planning an initial field reconnaissance program, including mapping and rock-chip sampling to assess the reported pegmatites for spodumene and lithium mineralisation. Data acquisition and compilation has started, while desktop studies are underway to help define the company’s exploration campaign that is expected to kick off in September.

Picking up the Sundown project has the potential to turn Cazaly into a serious lithium explorer, especially considering its location near the Corvette discovery where Patriot has revealed some massive hits, including 122.6m at an impressive 1.89 per cent lithium oxide. Once the deal is completed, the market will be keeping a close eye on what the company can unearth when assays return from its initial drill program.

Maybe today’s ASX market run was just the beginning.

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