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Kalamazoo, Karora join forces to spin out lithium assets

Updated: Apr 19

Kalmazoo Resources and Karora Resources have joined forces to consolidate their lithium interests into “Kali Metals”. Credit: File

ASX-listed Kalamazoo Resources and its Canadian counterpart Karora Resources have joined forces to consolidate their Australian lithium assets into a new initial public offering (IPO) to be known as Kali Metals.

Kalamazoo holds a 55 per cent interest in the new entity, slated for listing on the ASX in September, with Karora mopping up the remaining 45 per cent prior to the IPO.

Up to $12 million is expected to be tipped into the till with the IPO earmarked to fund exploration and drilling across a cache of projects adjacent to world-class lithium mines and deposits in Western Australia’s Pilbara and Eastern Yilgarn lithium hubs and within the evolving pegmatite fields in New South Wales’ Lachlan Fold Belt.

As part of the deal, Kalamazoo is offering up its Dom’s Hill and Marble Bar lithium projects in the Pilbara, together with its Jingellic and Tallangatta lithium projects in NSW.

The Marble Bar project is 25km north of Global Lithium Resources’ 18-million-tonne Archer lithium deposit, which averages 1 per cent lithium oxide. Recent mapping and rock-chip sampling has unearthed a swarm of outcropping spodumene-bearing pegmatite dykes returning assays up to 2.8 per cent lithium oxide. The best outcrop included four rock-chip assays from 2.1 to 2.8 per cent lithium oxide in a 1.1km strike length.

The Dom’s Hill project is along a significant strike extent of Archaean granite-greenstone contact zone, affectionately known as the “Goldilocks zone”, which is considered highly prospective to host lithium-caesium-tantalum (LCT) pegmatites similar to Pilbara Minerals’ nearby world-class Pilgangoora lithium mine.

Exploration at Marble Bar and Dom’s Hill is part of Kalamazoo’s joint venture (JV) with major Chilean lithium producer Sociedad Química y Minera de Chile S.A. (SQM). Kalamazoo previously announced that SQM has the right to earn up to a 70 per cent interest in the tenements, with an initial 30 per cent earned through expenditure of $12 million in four years. With the blessing of SQM, Kalamazoo has assigned its interest in the JV with Kali.

Further afield, Kalamazoo is an early mover at its Jingellic and Tallangatta projects in NSW’s coveted Lachlan Fold Belt. The company’s Tallangatta tenure extends over the border from Dart Mining’s Dorchap lithium project where Dart says it has recorded the first lithium-bearing pegmatites in Victoria.

Kalamazoo notes both the Jingellic and Tallangatta projects house fertile granites, pegmatites and a slew of tin-tungsten and tantalum old workings, alluding to the prospectivity of the region for hosting the sought-after LCT pegmatites.

Karora’s Higginsville lithium project tops off the cache, taking in about 1600 square kilometres of tier-one tenements in the East Yilgarn lithium corridor, which is home to the Mineral Resources Marion lithium mine and Liatam Mining’s Bald Hill lithium mine.

Tallied up, Kali Metals will have its foot on more than 3800sq km of top-notch tenure.

With Kalamazoo’s primary focus on gold, we have contemplated spinning out our Pilbara and Lachlan Fold Belt lithium projects for quite some time now. When the opportunity arose to join with Karora, into what we consider will be a significant critical minerals exploration company in Australia, the rationale was compelling. Kalamazoo Resources chairman and chief executive officer Luke Reinehr

Previous managing director of Karora and mining stalwart Graeme Sloan will take the helm at Kali, supported by Mr Reinher as non-executive chairman.

Lithium markets have recently taken a pelting, with prices plunging 70 per cent from last year’s astronomical highs, on the back of oversupply and the end to generous Chinese electric vehicle subsidies.

However, global financial powerhouse Morgan Stanley believes lithium markets have hit a turning point with falling midstream inventories and a slowing of supply growth boding well for future prices.

With its lithium assets packaged neatly into a critical metals vehicle, Kalamazoo has set its sights firmly on the ongoing development of its gold assets in the Pilbara. The company recently reported an updated mineral resource estimate at its Ashburton gold project of 16.2 million tonnes at a solid grade of 2.8 grams per tonne gold for a total of 1.44 million ounces, based on its four key deposits at Mt Olympus, Peake, Waugh and Zeus.

As gold prices continue to trend over the US$2000 (AU$2950) per ounce mark, Kalamazoo looks to have hedged its bets for two in-vogue commodities.

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