Atlas Iron Limited will partner with Pilbara Minerals Limited in relation to two lithium projects in the Pilbara region of Western Australia. Pilbara has agreed to acquire and farm into Atlas’ Cisco lithium prospect, where sampling has identified lithium enrichment at grades which are in line with Pilbara’s flagship Pilgangoora lithium project.
Atlas and Pilbara have also entered into a memorandum of understanding setting out terms for Atlas to provide logistics services to a direct shipping ore phase of Pilbara’s Pilgangoora lithium project.
Atlas retains ownership of other lithium prospects in the region. Atlas Managing Director Cliff Lawrenson said the agreements would diversify Atlas’ business for minimal capital outlay.
“This agreement gives Atlas the opportunity to realise the value of Cisco using Pilbara’s lithium expertise and investment, and a farm-in model which frees Atlas of any expense until a decision to mine,” Mr Lawrenson said.
“At the same time, we can generate additional revenue by providing a logistics service to Pilbara which leverages our existing operations and skills, developed over a decade of work in the Pilbara region.”
Cisco Farm-in and Joint Venture Agreement
The Atlas-owned exploration licence (E45/4270) sits in a zone of known lithium deposits. The area has been explored for tantalum and tin by its previous holder. Atlas re-analysed this data to identify the Cisco lithium prospect ~20km south-west of Wodgina.
Logistics services
Pilbara has completed a definitive feasibility study for a long-life lithium project at the Pilgangoora site, ~30km east of Atlas’ Wodgina mine. Pilbara has advised the market that it aims to commission Pilgangoora by the end of this year, with production scheduled to ramp up during 2018.
Pilbara has also announced that it is investigating the opportunity to export 1.9 mt of direct shipping spodumene ore as early as July 2017 via an offtake agreement with a Chinese lithium carbonate. The offtake agreement between Pilbara and its customer remains subject to a number of conditions precedent including Australian and Chinese regulatory approvals and a final investment decision from the Pilbara board.
Atlas and Pilbara have entered into a non-binding memorandum of understanding (MOU) setting out the key terms on which Atlas proposes to assist Pilbara to export direct shipping spodumene ore. Atlas plans to leverage its existing logistics chain to provide haulage, crushing and port services to Pilbara. The parties intend to negotiate formal binding documentation which would remain subject to conditions including board and regulatory approvals, and Pilbara’s offtake agreement becoming unconditional.
