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Lake Johnston sale nets $2m for Lithium Australia

Updated: May 6

Lithium Australia has agreed to sell its interest in the Lake Johnson lithium project. Credit: File.

Lithium Australia will get a $2 million windfall for selling its remaining 30 per cent interest in the Lake Johnston lithium project near Norseman in Western Australia to Charger Metals – a move which reinforces its core operations focus on lithium chemicals, battery materials and battery recycling.

But the company will retain financial exposure to the Lake Johnson operation as Charger’s major shareholder – with 9.6 million shares for a 15.46 per cent hold in the company – and as part of the sale deal, it will also have the first right of refusal for up to 30 per cent of lithium offtake from the project, with a view to future commercial production of lithium ferro phosphate.

Charger will initially be required to pay a non-refundable exclusivity payment of $150,000 within two days of the signing of the agreement, which will be subject to shareholder approval at an upcoming annual general meeting. The remaining $1.85 million must then be paid on completion of the deal, which must be satisfied before February 28 next year.

An interesting aside for Lithium Australia comes in revelations today that mining giant Rio Tinto has agreed to a farm-in deal to invest into the project with Charger.

Rio Tinto Exploration will invest $1.2 million in Charger and pay an extra $500,000 prior to the farm-in and will commit to $3 million in exploration expenditure in the first year. It can then earn 51 per cent of the project by spending another $10 million on exploration and paying Charger at least an extra $1.5 million.

It can go on to earn up to 75 per cent by sole-funding $40 million in exploration expenditure or by completing a definitive feasibility study into the project that has 50km of lithium-bearing, spodumene-prospective ground.

As a significant shareholder of Charger, we are excited by the partnership between Rio Tinto Limited and Charger and believe this provides a win-win outcome for all. The transaction reaffirms our commitment to focusing on our core operations, while aligning the Company to its ESG ambitions. I am excited by our future prospects and believe this transaction will help us to lead and enable the global transition to sustainable electrification. Lithium Australia chief executive officer and managing director Simon Linge.

The company made a significant move in August this year when it signed a landmark joint development agreement with Mineral Resources to commercialise its disruptive lithium extraction technology – which aims to create lithium battery chemicals through a chemical reaction rather than the traditional and expensive method of roasting.

The technology, known as “LieNA”, has a lower cost base and Lithium Australia says it can potentially extract lithium economically from grades that would ordinarily end up in the waste dump. LieNA is progressing with pilot plant planning and budgeting, scheduling of activities and governance principles, which will all be assessed as part of the combined effort between the companies.

As part of Lithium Australia’s battery recycling program, run through its wholly-owned subsidiary Envirostream, a record-breaking 29 per cent increase in battery collection was recorded last quarter, with the resulting sales of mixed metal dust netting the company $261,000.

At the end of past quarter, the fifth consecutive quarter of profit for the company, Lithium Australia had cash and listed investments at $7.9 million, with its sale of listed holdings adding $550,000. Now, with Lake Johnston off its books and an extra $2 million in the bank, it is well positioned to progress its core business within the circular battery economy.

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