Olympio Metals Limited has revealed it has completed terms with Liontown Resources Limited, who will farm into Olympio’s Mulwarrie and Mulline lithium projects located in the Eastern Goldfields of Western Australia.
Sean Delaney, the Managing Director of Olympio, commented: “We are very pleased to partner with Liontown, a well-led company with significant lithium discovery and development experience. With Liontown’s Kathleen Valley mine under construction, they recognise the importance of discovering further lithium deposits.
“The Mulwarrie and Mulline Projects contain a number of pegmatites that demonstrate the right geology but that have not been fully tested. We are excited by the plans that Liontown has for the projects. “Importantly, Olympio retains significant exposure to discovery success with the ability to contribute to funding and remain at 49% once Liontown has completed the Stage 1 farm-in.”
Details of the Stage 1 farm-in
Liontown must complete a geochemical programme of 1,100 samples across the projects to make an initial assessment before proceeding to the Stage 1 earn-in. Liontown will use its best endeavours to complete this programme within four months and may decide to withdraw from the agreement at that time with no interest in the project.
Liontown may elect to proceed to Stage 1 once the minimum commitment has been met and can earn a 51% interest in the Mulwarrie and Mulline projects by spending A$400,000 on exploration over twelve months. At the completion of the Stage 1 farm-in, Liontown will have earned the right to 51% equity in the projects.
Once Liontown has earned a 51% interest in the projects, Olympio can elect to end the farm-in and form a Joint Venture (JV), with Liontown holding 51% and Olympio 49% and each contributing pro rata to their share in the JV with Liontown being the manager of the JV. The JV agreement will be on standard commercial terms.
Mulwarrie and Mulline Stage 2 farm-in
If Olympio does not elect to end the farm-in and form a JV, Liontown may earn a further 39% interest in the projects by sole funding an additional $1,000,000 on exploration within three years from the completion of the minimum commitment (Stage 2 farm-in). Stage 2 farm-in will not occur if the JV has been formed. After the Stage 2 farm-in, Liontown will hold a 90% interest in the projects and Olympio 10%. At this point, Olympio can again elect to enter into a JV agreement and contribute pro rata to the exploration expenditure.
If Olympio does not elect to form a JV at the end of the Stage 2 farm-in, its 10% interest will convert to a 1% gross revenue royalty payable on the product sold from the projects. Liontown has the right to buy back half the royalty by making a $2m payment to Olympio. Liontown will commence work immediately on the areas subject to the farm-in agreement at Mulwarrie and Mulline (Fig. 1), and Olympio will continue its exploration in the other project areas.
