Galan Lithium Limited (ASX:GLN) is set to own 80% of the world-class Greenbushes South Lithium Project after signing a joint venture agreement with Lithium Australia NL (ASX:LIT).
The acquisition requires Gallan to issue 1.2 million fully-paid ordinary shares to Lithium Australia and pay the joint-venture expenditure share until completion of a preliminary feasibility study.
In return, Lithium Australia will provide 80% equity to Galan.
Subsequently, the JV calls the two parties to contribute on a pro-rata basis, or Lithium Australia may dilute and retain a 2% net smelter royalty.
Adrian Griffin, managing director of Lithium Australia, said that the divestment of the Greenbushes Project to Galan aligns with Lithium’s ongoing strategy to advance proprietary, downstream lithium and battery technologies, and to deliver an ethical and sustainable supply of energy metals for batteries through an energy-metals loop.
“This transaction means that the Company reduces its financial commitment and exploration risk yet retains significant lithium commodity exposure by way of both Galan shares and 20% Project equity,” Griffin added.
Greenbushes South Lithium Project
With an area of 353 km2, the Greenbushes South Lithium Project is the largest hard-rock lithium mine globally. The project is located 200km south of Perth.
Lithium Australia sought to explore the Project’s world-class Greenbushes Lithium Mine and a nearby southern-strike projection of the geological structure that hosts Greenbushes.
Pilot operations at Greenbushes headed by Talison Lithium Pty Ltd, an incorporated joint venture between Tianqi Lithium Corporation (51%) and Albemarle Corporation (49%), began in May 2014.
Greenbush produces concentrated lithium mineral (spodumene) for export to mineral conversion plants in Europe, North America, and China.