REG - Mila Resources Plc - Agreement with Liontown to Explore for Lithium

Mila ResourcesAnnouncement

27/07/2023 07:15

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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               +44 (0) 20 7100 5100

 Tavira Financial Limited

 Nick Emerson                 +44 (0) 20 3143 0600

 SI Capital

 Susie Geliher                +44 (0) 20 7236 1177

 St Brides Partners Limited

 

 

 

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