ASX-listed gold developer Classic Minerals has entered into a joint venture treaty with Tribitrage Holdings that will see the company offload 80 per cent of its lithium interest rights at two Kat Gap mining tenements near the Southern Cross region of WA. Under the agreement, Tribitrage will cough up $300,000 to claim a majority stake and will be required to outlay $500,000 in exploration within the first 2 years.
The deal will allow Classic to preserve its exposure to the in-vogue battery metal market that has been on a tear of late, whilst enabling the Perth-based company to maintain its focus on the precious yellow metal at its Kat Gap gold project. Classic believes the decision could help fund its ongoing commitments at the project.
Importantly, Classic will maintain a 20 per cent free carried interest in the deal. In the event of a decision to mine a joint venture with will be formed with Tribitrage taking on management duties. Each partner would then be obligated to contribute its proportionate share of spending or have its interests diluted.
Classic says Tribitrage will also be looking to sniff out a number of other minerals associated with lithium and that in line with the terms of the agreements, Tribitrage must comply with all statutory reporting requirements and do everything in its power to keep the tenements in good order.
Classic Minerals’ Chairman, John Lester, said:“This joint venture with Tribitrage will provide Classic a host of benefits whilst permitting Dean Goodwin and his team to concentrate on mining the Bulk Sample and further prove up more ounces at Kat Gap. The commitment by Tribitrage to explore for lithium and associated elements will assist with the expenditure requirements on the Kat Gap tenements.”
The divestment announcement follows news that Classic was closing in on production at Kat Gap following the receipt of a permit to clear native vegetation for its mine and processing plant in WA’s goldfield region. The company is now only awaiting regulatory approval for its mining proposal, that reviews its mine closure plan before hitting the go button at the operation.
Late last year, Classic began trial mining at Kat Gap with a 49,000-tonne bulk sample in preparation for regulatory permission and full-scale production.
The project may yet become the gift that keeps on giving after notching a string of milestones over the last few months. Late last year, the company nailed multiple high-grade gold intercepts from extensional drilling. That work delivered a number of head-turners, including a 1m interval grading 44.43 g/t gold within a wider 6m intersection at 8.94 grams per tonne gold from 142m.
Classic’s decision to offload its lithium interest rights at Kat Gap could prove a shrewd piece of business for the company especially given the fact it provides a cash boost to its gold operation as it approaches the pointy end of things. With bucket loads of hype around lithium at present, it would have taken a focused mind to sell off such a stake, albeit with the 20 per cent stake acting as the insurance policy. However, time will tell whether it proves to be a masterstroke that put Classic’s gold business on the map.
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By Matt Birney
