Rio Tinto has expanded its hunt for lithium, buying into one of the hottest exploration regions in Canada, as Gina Rinehart also stepped up in the race for lithium assets on Thursday.
Rio this week agreed to buy into a suite of tenements in the James Bay region of Quebec controlled by Canadian-listed Midland Exploration, which already has deals with BHP and Rio elsewhere in the country for base metals tenements.
The deal will see Rio pick up access to more than 1000sq km of prospective lithium tenements in the region, with the company agreeing to spend $US14.5m over five years to earn a half-stake in the tenements, and another $US50m to take itself to a 70 per cent holding.
Rio’s exploration team is already active in Canada, Australia, Finland and Brazil in the search for lithium tenements, after the company was forced to put its advanced project on hold in Serbia last year. It also has a previous base metals exploration deal with Midland, as does rival mining giant BHP.
But despite the fact that Rio boss Jakob Stausholm has publicly played down prospects of buying more lithium through corporate activity, saying listed lithium companies cost too much, Rio’s earn-in deal to Quebec’s James Bay region will put investors in a slew of Australian explorers on alert for potential future deals.
ASX-listed Allkem is working through a merger with US-headquartered Livent aimed at turning the pair into a major player in global lithium supply. Allkem has held tenements in the James Bay region for years, but those holdings are likely to be less important to the company than consolidating its producing assets in the US, South America and Australia.
One of the Midland projects Rio has gained access to – Galinee – is only a short distance from the Adina project held by ASX-listed Winsome Resources.
A second group are close to the Corvette project held by the Ken Brinsden-chaired Patriot Metals, rated at $750m on the market on Thursday, long speculated as a takeover target for major players such as Mineral Resources and even Rio itself.
Rio’s move in Canada came as Mrs Rinehart’s Hancock Prospecting group extended its WA interests into lithium, with Hancock Magnetite Holdings striking a binding joint venture agreement with explorers Legacy Iron Ore and Hawthorn Resources.
Hancock already has an agreement with the explorers over iron ore projects in WA, but formalised its claims on the lithium – and other metals – covered in its existing agreements.
Legacy’s controlling shareholder is state-owned Indian iron ore miner NMDC, and Mrs Rinehart is a long-time admirer and public supporter of Indian Prime Minister Narendra Modi, who met with the Australian billionaire on his Australian tour in May, as part of the Indian government’s push to extend its access to battery making materials.
Under the deal, Hancock will pay the pair $4m for a 7.5 per cent interest in the Mt Bevan project – $2.4m to Legacy Iron and $1.6m to Hawthorn – and spend up to $22m to take its interest in the lithium aspect of the tenements to 51 per cent. The deal effectively locks in any lithium supply from the tenements to India, with Legacy – which is more than 90 per cent held by NMDC – retaining the right to at least 75 per cent of any lithium produced from a mine built at the project.
Legacy shares closed up 35.3 per cent at 2.3c on Thursday, with Hawthorn up 3c, or 31.3 per cent, at 13c. Winsome Resources shares closed down 3.4c at $1.485, with Patriot Metals off 8.5c at $1.815. Rio shares closed up $1.60 at $117.75.
