TIDMMILA
RNS Number : 3175H
Mila Resources PLC
27 July 2023
Mila Resources Plc / Index: LSE / Epic: MILA / Sector: Natural
Resources
Certain information contained within this Announcement is deemed
by the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as applied in
the United Kingdom. Upon publication of this Announcement, this
information is now considered to be in the public domain.
27 July 2023
Mila Resources Plc
('Mila' or the 'Company')
Option Agreement with Liontown Resources to Explore for
Lithium
&
Amendments to Kathleen Valley Earn-In Agreement
Mila Resources Plc (LSE:MILA), the post-discovery gold
exploration accelerator is pleased to announce that, together with
the other owners of the Kathleen Valley licence ("Licence"), it has
entered into an option agreement with LBM (Aust) Pty Limited, a
subsidiary of Liontown Resources Limited (ASX: LTR) ('Liontown'),
granting Liontown the option to explore for lithium on the Kathleen
Valley Licence Area in Western Australia ('KV Project').
Simultaneously it has entered into a deed of amendment with
Trans Pacific Energy Group Pty Ltd ("TPE") and New Generation
Minerals Limited ("NGM"), the other owners of the Licence, making
certain amendments to the Earn-In Agreement between them dated 29
October 2021 ("Earn-In Agreement") as part of the re-listing of the
Company on the LSE in November 2021.
Overview
-- Liontown, the ASX lithium developer with a market
capitalisation of A$6.0 billion, expects to bring its proximal
Kathleen Valley Lithium Project into production in mid 2024, for
which it has offtake arrangements in place with LG, Ford and
Tesla.
-- Under the proposed transaction, Liontown will fund all
lithium exploration activities, mining costs and associated
Heritage Surveys.
-- Mila, TPE and NGM will maintain ownership over the gold and
other minerals on the Licence Area.
-- Following initial exploration, Liontown will have the option
to acquire the right to extract lithium from the Licence Area
("Lithium Rights").
-- Liontown has the option to acquire up to 80% of the Lithium
Rights from Mila and TPE for a total consideration of up to
A$2,200,000 through a phased investment programme.
-- By agreement with TPE and NGM, Mila currently has a 50%
interest, in the Lithium Rights, representing 10% of the Lithium
Rights following full exercise by Liontown of its option.
Transaction Rationale
-- Liontown has significant experience and expertise in lithium
exploration and development specific to the wider Kathleen Valley
area and has established itself as one of the most successful
lithium explorers in Australia.
-- All drill and assay analyses from Liontown's work at the KV
Project will be shared with Mila's exploration team, potentially
enabling a further acceleration of geological assessment across the
full KV Project at limited cost to Mila.
-- Liontown will be liable for all costs associated with the
Heritage Surveys over the relevant areas of the KV Licence and will
apply its significant expertise in Heritage Survey management
enabling Mila to leverage off the development of these studies for
the purposes of its own gold exploration and development
activities.
The Liontown Transaction
The transaction has granted Liontown the option to acquire the
Lithium Rights on the Licence in a phased programme as follows:
1. Liontown will fund the exploration and mining costs and bring
the benefit of its considerable knowledge of local geology to the
project.
2. Liontown may acquire a 50% interest in the lithium rights on
the Licence for a consideration of A$200,000; and
3. Liontown may acquire a further 30% interest in the lithium
rights for consideration of $2,000,000.
Liontown has also agreed, subject to completion of transaction
documentation, to invest A$100,000 in Mila through a convertible
loan on the following principal terms:
1. the Notes are repayable by conversion into Mila Shares at a
price to be determined on Mila's next fundraise;
2. Mila may repay the Notes without penalty after 31 December 2023;
3. Liontown may redeem the Notes following the occurrence of
usual events of default or if the Notes have not been converted
into Mila Shares by 30 November 2023; and
4. the Notes carry no interest except on the occurrence an event
of default, when interest at 10% per annum will become payable.
Amendment to the Earn-In Agreement
Mila, TPE and NGM have also entered into a deed of amendment
amending the Earn-In Agreement ("Deed of Amendment") pursuant to
which they have agreed that Mila may:
-- increase its Participating Interest in the Licence from its
current 30% to 80% on the issue of the Stage Two Consideration
Shares;
-- increase its ownership of the current Lithium rights from 50%
to 80% on the issue of the Stage Three Consideration Shares,
representing 16% of the Lithium Rights following full exercise by
Liontown of its option; and
-- at any time when the Parties are not conducting a physical
drilling campaign, reduce Mila's liability for expenditure to
maintain the Licence to its Participating Interest (currently
30%).
Mark Stephenson commented:
"This is a highly exciting development which adds a new and
potentially valuable dimension to the Kathleen Valley Project.
"Through this agreement with Liontown, we will see lithium
exploration underway at this area of the Licence, which has been
untested to date, and opened-up for exploration whilst being
insulated from costs. This lithium mineralisation has been shown to
have strategic importance on an international scale, most recently
evidenced by a proposed A$5.5 billion bid for Liontown by Albemarle
Corporation (ALB.N) one of the largest lithium producers worldwide.
In rejecting the Albemarle approach Liontown asserted its belief
that the bid substantially undervalued Liontown, highlighting the
significant commercial value of the lithium mineralisation
potentially on our doorstep.
"In addition to Liontown's work unlocking the lithium value from
this area of the Licence, we will also benefit from their funding
of supplementary development work including Heritage Surveys, which
are a significant undertaking. We expect there to be considerable
geological knowledge from Liontown's exploration data on this area
which we will apply to our own understanding of the gold
minerlisation at Kathleen Valley, as we look to expand our gold
resource inventory this year.
"Finally, the benefits and synergies of this work comes at no
incremental cost to Mila and allows us to leverage the deep local
experience from the Liontown team."
**ENDS**
For more information visit www.milaresources.com or contact:
Mark Stephenson info@milaresources.com
Mila Resources Plc
Jonathan Evans
Tavira Financial Limited +44 (0) 20 7100 5100
Nick Emerson
SI Capital +44 (0) 20 3143 0600
Susie Geliher
St Brides Partners Limited +44 (0) 20 7236 1177
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