Alien Metals (LSE: UFO) has entered a binding heads of agreement the Australian explorer Zenith Minerals (ASX: ZNC) to acquire 100% of the Vivash Gorge iron ore project in Western Australia.
The project covers approximately 47 square kilometres in the Pilbara region and is strategically located 60km south of Alien’s Brockman iron project.
Under the terms of the deal, Alien can acquire 100% of Vivash Gorge through a mix of upfront and performance-based consideration to Zenith based on the achievement of certain milestones.
It will start with the issue of $100,000 in common Alien shares at completion of the transaction.
Zenith will be issued with another $50,000 in Alien shares prior to the release of an announcement confirming an initial, economic direct shipping ore (DSO) resource at the area covered by the Vivash Gorge tenement.
A third issue of $100,000 in Alien shares will occur prior to the release of an announcement confirming the conversion of the exploration licence to a mining licence.
A final $200,000 share issue will happen prior to the release of an announcement confirming an economic DSO resource of more than 10 million tonnes.
Alien will issue the relevant number of deferred consideration shares within seven days of each milestone announcement being published on the London Stock Exchange.
In addition to the consideration, Alien will grant Zenith an ongoing production royalty payment of $1 per dry wet tonne of the quantity of shipped ore derived from the area within the boundaries of the mining licence.
The Vivash Gorge divestment fits with Zenith’s strategy of focusing on lithium and other critical minerals for the electric vehicle and renewable energy storage markets.
Its aspirations are being backed by the Zenith Lithium Joint Venture, which was created earlier this year with Saudi Arabia’s EV Metals Group.
The partners will focus on the development of the Waratah Well and Split Rocks projects, with EV Metals eligible to earn a 60% interest in the lithium rights by sole funding a feasibility study, while Zenith retains a 40% share.
Zenith and EV Metals will also work together on a non-exclusive basis to assess lithium opportunities in Australia under the Australian Lithium Alliance (ALA).
Under that agreement, each company will each fund their share of costs related to the assessment, exploration and funding of any developments based on their equity holdings, with EV Metals owning marketing rights to any offtake.
The Mt Ida North option agreement announced earlier this month is being pursued under the ALA partnership.