The decision to exercise the option with Macarthur’s wholly owned subsidiary Macarthur Lithium Pty Ltd (MLi) follows completion of due diligence.
With Macarthur advised of the decision, FEL will now proceed with stage I exploration of the tenements.
READ: Fe Limited secures option over large footprint in world-class Pilbara region, shares surge 50%
The Macarthur tenement package provides FEL with access to highly prospective ground in a world-class lithium, gold and base metals province near to major infrastructure.
Site visits and sampling conducted by MLi identified several targets for further exploration with several occurrences of observed pegmatite in outcrop.
Large lithium landholding
The acquisition potentially provides FEL with the biggest landholding of lithium tenements in the country.
The stage I exploration will include extensive mapping focusing on areas where previous exploration identified occurrences of spodumene, before an extension drilling program is undertaken.
Hillside, Panorama and Bonnie Scot projects are gold prospects within the package that also present exploration upside.
As part of an option agreement with MLi, the parties have agreed that the payment terms of the option exercise fee be extended to August 31, 2019.
FEL and MLi have also agree to cooperate to advance the project and may seek to reduce or otherwise amend the project expenditure commitments in due course, dependent on the results of stage I exploration.
The option agreement involves FEL earning up to 75% in three stages, the first stage being an initial 25% stake by spending $800,000 and paying $500,000 cash within 12 months.
A further 30% can be earned by spending an additional $750,000 and paying $750,000 in cash or shares within 24 months.
The third stage earning the final 20% requires a further $750,000 expenditure and $750,000 in cash or shares within 36 months of exercise.
FEL is well-funded to advance the agreement after raising more than $750,000 in a recent placement and receiving a royalty payment of $211,729 in relation to mining conducted by Mineral Resources Ltd (ASX: MIN) at its Deception iron ore mine.
Further and increased quarterly royalty payments are expected as mining at Deception ramps up.