Galileo Mining Gains After Signing Lithium Farm-In With Mineral Resources

Galileo Mining Ltd (ASX: GAL) has entered into a farm-in and joint venture agreement (JVA) with Mineral Resources Ltd (ASX: MIN) (MinRes).

Under the JVA, Galileo will sell 30% of all lithium rights it holds on the Norseman Project in Western Australia for $7.5 million in cash.

MinRes will pay $5 million within five days of execution of the JVA and $2.5 million within 12 months after execution.

Galileo shares were last trading ~16% higher intra-day, at $0.28.

JVA terms

Other important terms of the deal include:

  • Galileo and MinRes to form a 70% Galileo / 30% MinRes joint venture to explore for lithium on the project tenements;
  • MinRes can sole fund $15 million of expenditure over four years to increase its stake in the JV to 55% (Stage 2);
  • At the completion of Stage 2, MinRes may elect to increase its stake in the JV to 70% by sole funding expenditure through to a Decision to Mine (Stage 3); and
  • Galileo retains ownership of the Project’s tenements and all rights to nickel, PGEs, and all minerals other than those contained within lithium-bearing pegmatites within the project area.

Short cut to development

Galileo Managing Director Brad Underwood said: “We are excited to add a lithium exploration joint venture to our ongoing exploration programs for PGEs and nickel at our Norseman Project.

“The Norseman project has excellent lithium potential and is strategically located in the world’s most prospective region for lithium.

“The project’s outstanding location relative to existing infrastructure provides a short cut to development for any lithium resources discovered through the joint venture.”

Increase in cash reserves

Underwood noted that Galileo will benefit from a focused program of lithium exploration by MinRes, one of Australia’s pre-eminent lithium companies.

Galileo’s cash reserves will also increase to aggressively pursue other high-value resource discoveries at both its Norseman and Fraser Range projects.

“With $5 million of additional funding to be received within five days of execution of the agreement, a further $2.5 million to be received within 12 months, and $10 million in the bank, Galileo is fully funded to undertake all of its planned exploration programs,” added Underwood.

 

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