Privately owned explorer Saga Metals has announced the execution of an option to joint venture agreement with Rio Tinto Exploration Canada (RTEC) for its Legacy lithium project in Québec, Canada.
Announced on Wednesday (July 3), the deal outlines the terms under which RTEC can acquire up to a 75 percent interest in the asset through staged investments and exploration expenditures.
The Legacy lithium project, located in the Eeyou Istchee James Bay region of Québec, is comprised of 663 claims covering 34,243 hectares and features 100 kilometers of striking paragneiss.
Under the agreement, RTEC, a subsidiary of Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO), has the opportunity to earn an initial 51 percent stake in the project over four years by meeting financial and exploration commitments.
To earn the initial 51 percent interest, RTEC will have to make cash payments totaling C$410,190 to Saga by August 11 of this year. Additionally, RTEC is committed to spending C$9,571,100 on exploration activities, including a firm commitment of at least C$1,709,125 within the first 20 months of the agreement.
Upon earning its first 51 percent interest, RTEC has the option to increase its stake to 75 percent over an additional five year period. This second option requires RTEC to invest an additional C$34,182,500 in exploration.
During both the first and second option periods, RTEC will serve as the project operator for Legacy, overseeing the exploration and development activities. A technical committee made up of members from both Saga and RTEC will be established to review and prepare the exploration programs for the site.
“This marks a significant milestone in the Company’s development and creates a non-dilutive pathway for the necessary capital to properly explore our Legacy Lithium Project over the coming years,” said Mike Stier, Saga’s CEO and director.
In a related development, on Tuesday (July 2), Saga entered into an agreement with two undisclosed private vendors to acquire a 100 percent interest in the Amirault lithium property, also in Québec.
Amirault, which is contiguous to Legacy, covers an area of 31,347 hectares and expands Saga’s holdings within the Eeyou Istchee James Bay region to a total of 65,849 hectares — an increase of over 1,274 claims.
In the release, Stier notes that Saga continues to move toward an initial public offering.
“We are working through the regulatory process and anticipate filing our final prospectus in the coming days,” he said.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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