Pure Energy Minerals announced that it has agreed with the terms and signed the earn-in agreements with subsidiaries of Schlumberger for the development of the Clayton Valley lithium project in Nevada.
Pure Energy said that under the earn-in agreement, it has sanctioned an option in favor of the investor to acquire all of its interests in the Clayton Valley Project.
The investor is provided with feasibility of earning into the option by constructing a pilot plant for the processing of lithium brine at their own cost and expense. The investor is given three-year period to exercise the option, starting on the receipt of the final federal and state permits required to construct the pilot plant. The investor may exercise the option only if they have completed construction of the Pilot Plant and test work achieves certain parameters.
Pure Energy said that it would be entitled to a 3.0% net smelter returns royalty on minerals produced at the Clayton Valley Project upon exercise of the option.
In addition, the company will be entitled to an advance minimum royalty payment of $400,000 per annum starting 1 January 2021 for a period of five years or until the Clayton Valley Project achieves commercial production.
Pure Energy said that transaction is the result of negotiations between arm’s length parties, and is subject to the approval of its shareholders and other customary conditions, including the approval of the TSX Venture Exchange.
The company has arranged an annual general and special meeting of its shareholders on 28 May 2019, for approval of the transaction, and intends bring the transaction into effect shortly following the meeting.
Once the transaction effective, the investor will invest $1.5m in the company on a private placement basis for 32,421,737 common shares to be issued at a price per common share of $0.0615.
The company said that it is planning to use the proceeds of the placement to make certain property payments and for general corporate purposes.