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Friday, December 02, 2022

White Cliff to focus on lithium after project farm-out

ASX-listed White Cliff Minerals is set to offload a pair of its non-core assets after entering into a deal with GenX Resources to farm-out its Coronation Dam and Ghan Well nickel-cobalt projects in Western Australia. According to the company, the impending transaction reinforces its strategy of focussing on its wholly owned lithium and rare earths projects in the state.

White Cliff says the transaction is subject to GenX completing its due diligence on the projects, there being no adverse developments across the two nickel-cobalt ventures and GenX’s shares being successfully listed on the ASX.

Management says that although an exact completion date is unknown at this time, the term sheet will expire if the prerequisite criteria are not met by the end of August.

As per the terms of the deal, GenX will invest a minimum of $250,000 in the projects within six months of the ASX listing. GenX may opt to purchase 50 per cent of the projects by issuing $250,000 worth of GenX shares under a 10-day volume-weighted average price or “VWAP” to White Cliff if the minimum expenditure requirement is met.

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Following that, GenX has 18 months from the date of its initial public offering to spend another $1 million to obtain a further 30 per cent of the projects, thereby increasing its total holdings to 80 per cent.

GenX may then opt to buy the remaining 20 per cent stake by paying $1 million in cash to White Cliff and providing it with a 2 per cent net smelter royalty on any minerals extracted from the two projects.

Under the agreement, White Cliff may choose to receive $1 million in GenX shares under a 10-day VWAP instead of the cash payment.

White Cliff has been advancing its budding lithium and rare earth elements projects over the last few months after firing up a geochemical survey at its Hines Hill project and evaluating a series of remote sensing techniques and datasets complementary to its ongoing exploration.

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After completing the acquisition of two different projects and the purchase of two junior explorers, White Cliff Minerals bludgeoned its way into the white-hot lithium and rare earths sector late last year. As a result, the company picked up a portfolio of around ten lithium and rare earths projects, that at the time were believed to bring its total landholdings up to nearly 4000 square kilometers.

With prices of lithium climbing ever higher, White Cliff’s decision to focus on the commodity and farm-out its non-core assets may prove an astute move. Importantly, the boost in the bottom line also gives White Cliff the ability to fund future exploration without needing to rattle the tin in the market’s direction first.

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