Pure Energy Minerals Limited (TSXV: PE) reached a deal this week with subsidiaries of Schlumberger Limited (NYSE: SLB) on the terms of an earn-in agreement providing for the development of the company's Clayton Valley lithium project in Nevada.
Under the earn-in agreement, the company granted an option in favour of the investor to acquire all of the Pure Energy's interests in Clayton Valley.
"The investor may earn into the option by constructing a pilot plant for the processing of lithium brine at its cost and expense. The investor has a three-year period in which to exercise the Option (commencing on the receipt of the final federal and state permits required to construct the Pilot Plant) and may only exercise the option if it has completed construction of the pilot plant and test work which achieves certain parameters," the Vancouver-based miner said in a media statement.
The pilot plant's cost has been estimated at $15 to $25 millionOnce the option is exercised, Pure Energy will be entitled to a 3% net smelter return royalty on minerals produced at the Clayton Valley project and an advance minimum royalty payment of $400,000 per year starting January 1, 2021, for a period of five years, or until the Clayton Valley project achieves commercial production.
The lithium project is located in the Clayton Valley of central Nevada. It comprises 948 claims over 9,450 hectares and adjoins and surrounds on three sides the Silver Peak lithium brine mine operated by Albemarle. According to its Canadian developer, it represents the largest mineral land holdings in the valley.
Pure Energy also reports that the lithium-bearing brines identified at the Clayton Valley project are of high quality with very low impurity levels, and have been shown by small scale pumping tests to be amenable to conventional extraction.