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Kalamazoo Resources to spin out of lithium to focus on gold

Updated: Apr 19


Spodumene samples taken from Kalamazoo Resources’ Marble Bar lithium project. Credit: File

Kalamazoo Resources is set to spin out its Australian lithium projects through a demerger and a concurrent initial public offering of Kali Metals – a fledgling explorer out to raise $12 million.


As part of the deal, Kalamazoo shareholders will receive Kali shares in exchange for the company’s Pilbara lithium portfolio and its Jingellic and Tallangatta lithium projects in New South Wales.


TSX-listed Karora Resources is adding its Higginsville lithium project into the spin-out company, giving Kali a combined 3800 square kilometres of tenements, including about 1600sq km in the East Yilgarn lithium corridor that is home to Mineral Resources’ Marion lithium mine and Liatam Mining’s Bald Hill lithium mine.


Kalamazoo’s Pilbara lithium portfolio includes its Dom’s Hill and Marble Bar projects, which are part of its joint venture (JV) with major Chilean lithium producer Sociedad Química y Minera (SQM). The company 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 by spending $12 million in four years.


Kalamazoo is also adding its wholly-owned Pear Creek lithium project.


Kali is offering 48 million shares at an issue price of 25 cents per share to raise $12 million, with the ability to accept oversubscriptions for up to a further 12 million shares to raise an additional $3 million. Bell Potter and Canaccord have been appointed as joint lead managers.


The IPO of Kali Metals offers potential shareholders with a great opportunity to invest in an incredible portfolio of lithium exploration assets. These assets include Kalamazoo’s lithium projects in the Pilbara (in JV with SQM - one of the world’s leading lithium producers) and Lachlan Fold Belt, and Karora’s Higginsville Project in the Eastern Yilgarn. Kali’s WA lithium projects are in world class hard-rock lithium regions, in close proximity to operational lithium mines and deposits which we consider provides Kali with an unrivalled exploration portfolio. Kalamazoo Resources chairman and chief executive officer Luke Reinehr

Management says eligible Kalamazoo shareholders are expected to receive one ordinary Kali share for every 17.64 ordinary Kalamazoo shares via an in-specie distribution, subject to final shareholder and regulatory approvals.


Once Kalamazoo has its lithium assets squared away with the newly-formed Kali Metals, the company plans to focus its attention on its gold portfolio. It recently reported an updated mineral resource estimate at its Ashburton gold project in the Pilbara of 16.2 million tonnes at a solid grade of 2.8 grams per tonne for a total of 1.44 million ounces, based on its four key deposits at Mt Olympus, Peake, Waugh and Zeus.


Just last month, the company launched a three-hole diamond drill campaign at the Goldie North prospect within its Mt Piper gold project in central Victoria after discovering high-grade gold in rock-chip samples. It recently revealed that samples returned assays of 74 grams per tonne gold, 72g/t including visible gold and 42g/t gold, while an additional eight samples yielded results between 8.4g/t and 16.8g/t.


All but one sample graded more than 10g/t, with an average grade of all 17 samples coming in at 17.2g/t gold. They seem to be numbers well worth Kalamazoo following up, while its shareholders retain exposure to Kali’s lithium pursuit.


Is your ASX-listed company doing something interesting? Contact: office@bullsnbears.com.au

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