Mineral Resources is joining forces with this micro-cap lithium share

The two parties have signed a lithium deal for the Norseman Project.

| More on:
A group of people in suits and hard hats celebrate the rising share price with champagne.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Galileo Mining Ltd (ASX: GAL) share price was a very strong performer on Monday.

The small-cap mineral exploration company's shares ended the day 12% higher after announcing a deal with ASX 200 mining giant Mineral Resources Ltd (ASX: MIN).

Why has it signed a deal with this ASX 200 mining stock?

According to the release, Galileo Mining has entered into a farm-in and joint venture agreement (JVA) with Mineral Resources.

Under the agreement, the company will sell 30% of all lithium rights held by Galileo on the Norseman tenement to Mineral Resources for a $7.5 million cash consideration.

The release notes that Mineral Resources has already completed comprehensive due diligence prior to execution. As a result, there are no conditions precedent to completion of the transaction with the ASX 200 mining stock and the deal is expected to close within five business days of the execution of the JVA.

From completion, Mineral Resources and Galileo will form a 30%/70% unincorporated joint venture. However, Mineral Resources has the ability to increase its stake to 55% by sole funding an additional $15 million of exploration expenditure on the tenements over the four years following completion.

The ASX 200 mining stock also has the further ability to elect to increase its stake to 70% by sole funding expenditure through to a decision to mine. At that point, Galileo Mining must elect to either remain in a joint venture and contribute to development costs or convert its interest into a royalty.

'Excited'

Galileo's managing director, Brad Underwood, was very pleased with the deal. He commented:

We are excited to add a lithium exploration joint venture to our ongoing exploration programs for PGEs and nickel at our Norseman Project. The Norseman project has excellent lithium potential and is strategically located in the world's most prospective region for lithium. The project's outstanding location relative to existing infrastructure provides a short cut to development for any lithium resources discovered through the joint venture.

Galileo will benefit from a focussed program of lithium exploration by MinRes, one of Australia's pre-eminent lithium companies, as well as increasing our cash reserves to aggressively pursue other high value resource discoveries at both our Norseman and Fraser Range projects. With $5 million of additional funding to be received within five days of execution of the agreement, a further $2.5 million to be received within 12 months, and $10 million in the bank, Galileo is fully funded to undertake all of its planned exploration programs.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Materials Shares

Should you buy Pilbara Minerals shares today?

Let's see if analysts think investors should be buying the lithium giant's shares.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Expert says this ASX mining stock could rise almost 30%

Let's see which miner is being tipped as a buy for investors right now.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

BHP shares charge higher on record copper and iron ore production

Let's see how the miner performed during the fourth quarter.

Read more »

A man stands with hands on hips surveying construction of three high-rise buildings.
Materials Shares

Building activity on the rise – will ASX materials shares benefit?

New data from the March quarter shows a sharp rise in building activity. 

Read more »

Man smiling at a laptop because of a rising share price.
Materials Shares

Macquarie predicts 11% upside for this ASX materials stock

Here's why the broker is positive on the stock.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Rio Tinto share price falls on Q2 update

Let's see what the mining giant reported for the second quarter.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Materials Shares

Could these 3 ASX materials shares be set to double?

This broker has buy ratings and aggressive price targets for these holdings. 

Read more »

Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.
Materials Shares

Rio Tinto shares on watch after naming new CEO

The mining giant has found its new leader.

Read more »