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Jindalee Lithium’s Spin Out Secures $20m JV with MinRes

7 March 2024 13:57

Jindalee Lithium‘s (ASX:JLL) spin-out strategy continues to pay dividends, as its spin-out listing Dynamic Metals secures a significant $20 million Joint Venture (JV) agreement with Australian mining giant MinRes for its Widgiemooltha lithium Project.

Rubbing Shoulders With Giants

Under the agreement, MinRes’ wholly owned subsidiary Holdco will acquire an initial 40% interest in Widgiemooltha’s Lithium rights from Dynamic Metals for $5 million in cash, establishing a 40%/60% joint venture over the West Australian Project.

After the JV formation, MinRes has the option to increase its stake in the project to 65% by investing $15 million in exploration activities over the next four years, and can further elevate its ownership to 80% by solely funding the expenditure through a decision to mine.

Should HoldCo choose to take increase its holding to 80 per cent, Widgiemooltha can then choose to remain in a JV or convert it’s remaining interest in a royalty.

DYM emphasised its retention of exploration rights for all other minerals within the Project area, highlighting its significant potential to host gold and nickel mineralisation.

Spectacular Spin-out

In January of last year, Jindalee strategically spun out its critical metals portfolio into Dynamic Metals, enabling the company to maintain control over these promising projects while also freeing up resources to focus entirely on developing its wholly owned McDermitt Lithium Project. With Jindalee retaining a 25% interest in DYM, this move allowed for a streamlined approach to project management and resource allocation.

Utilising spinout listings to enhance project value while maintaining focus has proven to be an effective strategy in the resources industry. A prime example of this success is LSE-listed Power Metals Resources, whose recent spinout, Golden Metal Resources, debuted with a listing value of £1.98 million.

The recent significant JV agreement with MinRes further demonstrates the effectiveness of Jindalee’s strategy, providing exposure to potential project value while mitigating risk and allowing focused efforts on advancing the McDermitt Project.

Looking Ahead

Securing investment, particularly from a mining giant like MinRes, serves as significant validation of the project’s potential.

Dynamic Metals expressed satisfaction in finding a partner for Widgiemooltha, enabling them to pursue promising first-pass exploration opportunities.

“We are excited by this transaction as MinRes is a leader in the lithium sector in Australia, with the technical expertise and financial capabilities to do the Project justice,” Jindalee Lithium Managing Director Karen Wellman said.

“The initial consideration will be used to advance exploration of our pipeline of new projects,
whilst lithium exploration at Widgiemooltha is expected to generate considerable newsflow,
both short and medium term.”

JLL’s Australian Securities Exchange-listed share price is currently trading at $0.78 (1.15 pm UTC+ 8 hours).

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