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Dynamic inks transformative lithium deal with MinRes

Updated: May 27

Dynamic Metals has lured Mineral Resources to its Widgiemooltha project. Credit: File

Dynamic Metals (ASX: DYM) has inked a landmark $20 million joint venture (JV) agreement with a 100 per cent-owned subsidiary of mining giant Mineral Resources (as: min) to sell up to 80 per cent of the lithium rights at its Widgiemooltha project in Western Australia’s Goldfields region.

The news immediately resonated with ASX punters, with the company’s share price charging up to as high as 31c this morning from a previous close of 16c – a jump of more than 93 per cent.

Under the terms of the deal, MinRes will pay Dynamic an initial $5 million, broken down into an immediate $400,000 sign-on fee, $3.6 million on completion of the transaction and a deferred $1 million payment on July 1 next year.

Through its subsidiary HoldCo, the Chris Ellison-run MinRes can then increase its stake in the project to 65 per cent if it decides to fund an additional $15 million worth of exploration costs over four years. It can then jump to an 80 per cent holding by sole-funding expenditure through to a decision to mine.

Dynamic will then have the choice of contributing its share of the JV expenses or to convert its interest to a royalty. It will also retain all of its rights to both gold and nickel within the properties, which lie in an area renowned for both commodities.

The deal relates to Dynamic’s Spargos East, Mandilla East, Franks Far Southeast and Pioneer Dome West project blocks of granted and ungranted tenements that lie within a 60km radius of the centre of the main Mandilla block, just 40km south of the world-renowned nickel mining centre of Kambalda.

The entire suite of projects is surrounded by other major lithium projects – most notably the Mt Marion mining operation that is about 20km north-west of Kambalda and has an estimated lithium resource of 66.1 million tonnes at 1.4 per cent lithium oxide. Mt Marion is operated by MinRes and is jointly-owned by one of the world’s biggest lithium producers, Jiangxi Ganfeng Lithium.

MinRes also recently added the Bald Hill lithium operation to its burgeoning interests in the area, with an estimated resource of 26.5 million tonnes at 1 per cent lithium about 40km east of Dynamic’s Mandilla ground. The project has an annual production capacity of about 150,000 tonnes of 5.5 per cent spodumene concentrate.

Although we have had encouraging results with our first-pass exploration activities, the size of the Project means that it would take Dynamic many years and considerable expenditure to assess its potential and realise value. We are excited by this transaction as MinRes is a leader in the lithium sector in Australia, with the technical expertise and financial capabilities to do the Project justice.
Dynamic Metals managing director Karen Wellman

Wellman described Widgiemooltha as a “regionally-significant tenement package” that had yet to be fully assessed for its lithium potential. She said MinRes’ nearby Bald Hill mine provided for a potential pathway to production for any discoveries at the project.

Further afield, MinRes also holds 50 per cent of the Wodgina lithium mine in WA’s Pilbara region, making it the only company in the world to operate three hard rock lithium operations, each with their own spodumene concentrators.

The Widgiemooltha area is emerging as a significant lithium belt, not only with the Mt Marion and Bald Hill projects, but also Liontown’s Buldania project that sits about 60km south-east of Mandilla and features an estimated resource of 14.9 million tonnes at 1 per cent lithium oxide.

In May last year, Dynamic acquired three exploration licences in the Widgiemooltha area covering an additional 220 square kilometres of ground that it believes is prospective for lithium, gold and nickel.

The ground now comprises Franks Far Southeast and Pioneer West. It includes 20km of strike along the highly-prospective western side of Pioneer Dome, adjacent to and immediately along strike from Develop Global’s Dome North project and its estimated resource of 11.2 million tonnes at 1.2 per cent lithium oxide.

Global acquired the project from Essential Metals last July for about $150 million.

Throughout much of the area, historic exploration has focussed mainly on gold and nickel and only limited historical geochemical information on lithium and related elements exists. However, scattered references to geochemical lithium responses have been picked up in historic gold and nickel drilling.

Dynamic’s deal with MinRes looms as a transformative milestone for the company. It potentially enables the rapid exploration of a vast area of prospective ground for an in-demand commodity alongside a powerful partner with the full gamut of relevant experience from grassroots lithium exploration to shipping concentrate.

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