Liontown signs farm-in deal with WA lithium developer

Wed 05 Apr 23, 8:39am (AEST)
Olympio lithium gold

Key Points

  • Three-stage agreement includes potential 51% and 39% “earn ins” and JVs
  • First stage requires completion of 1,100 geochemical tests
  • Deal culminates in potential JV between Liontown (90%) and Olympio (10%)

The Stage 1 farm-in agreement will enable Liontown to earn a 51% interest in the Mulwarrie and Mulline Projects, which are located 120km outside of Kalgoorlie, Western Australia.

But first, Liontown must complete geochemical tests of 1,100 samples across these projects. If these meet minimum standards, Liontown can proceed to a stage 1 “earn-in”.

Under the terms of the agreement, Liontown is required to “use best endeavours” to complete this program within four months. It can also decide to withdraw from the agreement during this period, once the sampling mentioned above is completed, with no interest in the Mulline or Mulwarrie Projects.

Stage 1 Farm-in

If Liontown proceeds to this stage after meeting the minimum commitments, it can earn a 51% interest in the Mulline and Mulwarrie Projects, after spending $400,000 on a 12-month exploration program.

Joint venture option

After completion of the first stage – when Liontown will have earned a 51% interest in the projects – Olympio can elect to end the farm-in and instead form a joint venture.

Under this structure, Liontown and Olympio would hold a 51% and 49% share, respectively. Each would contribute pro-rata to their share in the JV, with Liontown the manager of the agreement.

Stage 2 Farm-in

If Olympio chooses not to form a JV, Liontown can earn a further 39% interest in the Mulline and Mulwarrie Projects, in exchange for spending a further $1 million on exploration over a three-year period.

At the completion of this, interest in the Projects would be jointly held by Liontown (90%) and Olympio (10%). Olympio is also then given a second chance to form a JV and contribute on a pro-rata basis to exploration efforts.

But if Olympio elects not to form a JV after completion of Stage 2, its 10% interest will convert to a 1% gross revenue royalty. This is payable on product sold from the projects, with Liontown given the rig to buy back half the royalty with a $2 million payment to Olympio.

DisclaimerMarket Index helps small-cap ASX-listed companies connect with Australian investors through clear and concise articles on key developments. Olympio Metals was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.

Written By

Glenn Freeman

Content Editor

Glenn is a Content Editor at Livewire Markets and Market Index. Glenn has almost 20 years’ experience in financial services writing and editing. Glenn’s journalistic experience also spans energy and automotive, in both Australia and abroad – including the Middle East – where he edited an oil and gas publication in the United Arab Emirates.

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