Lithium Australia Limited (ASX:LIT) has entered a joint development agreement with leading ASX-listed mining company Mineral Resources Ltd.
MinRes has a growing world-class portfolio of mining operations across multiple commodities, including lithium and iron ore and a market capitalisation of ~A$13.6 billlion.
Under the agreement, MinRes will solely fund the development and operation of a pilot plant and an engineering study for a demonstration plant up to the total budgeted cost of A$4.5 million, and will also supply the required raw materials to support the extraction process at no cost to Lithium Australia.
Lithium Australia will contribute its patented LieNA technology, which has the potential to enhance lithium extraction yields by up to 50% over current market performance, and will manage the pilot plant’s production process.
Lithium Australia’s patented extraction technology is underpinned by recovering lithium from fine and low-grade spodumene, which is usually disposed of as waste streams, improving mining efficiency, sustainability and potential profitability.
On successful completion of the pilot plant operations and engineering study, MinRes’ convertible note will convert into equity in a new joint venture (JV) between MinRes and Lithium Australia. Lithium Australia and MinRes will each have a 50% interest in the JV entity, which will wholly own the LieNA technology going forward.
The JV plans to license the LieNA technology to third-parties at a target headline gross product royalty rate of 8%4. The royalty model materially expands Lithium Australia’s addressable market as it has the potential to capture a fee on all tonnage processed via any mine utilising the LieNA technology.
The JV will initially license the LieNA technology to a larger demonstration plant which MinRes can elect to independently fund, develop, and operate. The larger plant will aim to extract lithium salt at a commercial scale under the licence. The licence will apply to current and future projects of MinRes and the royalty payable by MinRes under the licence is based on a discount to the headline royalty rate above in acknowledgement of MinRes’ first mover position.
Lithium Australia Chief Executive Officer, Simon Linge, said MinRes is an optimal strategic partner for Lithium Australia, as it mines substantial quantities of lithium at its own operations. Early target jurisdictions for licencing include Western Australia and North America, with potential for expansion into Europe and Africa as well.
We are thrilled by the formation of a new partnership with Mineral Resources, one of Australia’s largest and most prominent mining companies,” Mr Linge said.
“MinRes is the perfect partner to complement our leading lithium extraction technology, given its extensive owned operations and strategic movement downstream into the battery materials sector.
“Securing a development partner is also noted as a significant step within Lithium Australia’s recently released roadmap and serves as a powerful validation of our patented technology. We are excited by the future opportunity to licence our proven high- value technology to all existing and new lithium mines across Australia and the rest of the world.”