Morella Corporation Limited (ASX: 1MC) has executed a formal earn-in agreement with US-based, OTC listed Lithium Corporation to immediately commence an earn-in for the North Big Smoky (NBS) Project in central-west Nevada, USA.
The earn-in agreement now provides Morella with lithium projects in Nevada (NBS and the Fish Lake Valley Lithium Project).
NBS Project Under the Agreement, Morella can earn a 60% interest in the NBS Project by investing at least US$1,000,000 in aggregate over a four-year period on exploration and development activities along with making a total of US$500,000 payments in Morella shares to Lithium Corp staged over the four year earn in.
The formation and execution of the Agreement follows a Letter of Intent (LOI) and the completion of formal due diligence.
The Project is located in Nye County, about 110km to the north of the regional centre of Tonopah and 240km south-east of the major centre of Reno. Tesla’s Nevada Gigafactory is located 37km east of Reno.
The NBS Project area consists of 178 claims covering approximately 3,400 acres (1,376 hectares) in a well known, highly prospective lithium region. The Project straddles structural features that can be traced on the surface and have been assessed to be a potential conduit for lithium mineralisation in sediments and brines.
The earn-in on the NBS Project provides Morella the opportunity to expand its footprint in a wellknown, highly prospective lithium region of the USA, in an area relatively close to the company’s existing Fish Lake Valley Lithium Project.
Under the terms of the Agreement with Lithium Corp. Morella will earn a 60% interest in the NBS Project over a four-year period, by conducting exploration and incurring expenditure relating to exploration and assessments, including associated resource and feasibility studies on the Project.
The Expenditure Requirement is to be no less than US$1,000,000 in aggregate over the four-year period.
The company has the right to accelerate the earn-in by meeting the Expenditure Requirements early, however the minimum annual expenditure as follows:
• Year 1 – US$100,000
• Year 2 – US$200,000
• Year 3 – US$300,000
• Year 4 – US$400,000
In addition to the expenditure commitment detailed above, the company is required to make payments in shares to Lithium Corp. on the following basis:
• Within 60 days upon executing the EOA, issue US$100,000 equivalent in Morella shares
• 1st anniversary (from commencement of EOA), issue US$100,000 equivalent in Morella shares
• 2nd anniversary, issue US$100,000 equivalent in Morella shares
• 3rd Anniversary, issue US$100,000 equivalent in Morella shares
• 4th Anniversary, issue US$100,000 equivalent in Morella shares
Morella holds the option, within one year of earn-in completion, to purchase a further 20 per cent interest in the Project by paying Lithium Corp. US$750,000 and a further option within two years of earn-in completion to purchase the remaining 20 per cent interest in the Project by paying Lithium Corp. a further US$750,000. In the event of 100 per cent purchase of the Project, a 2.5 per cent Net Smelter Royalty (NSR) will be executed with Lithium Corp.
Morella can elect to purchase the rights to 50 per cent of the NSR from Lithium Corp. for US$1 million. Morella retains the right to withdraw from the EOA at any time by providing 30 days’ written notice to Lithium Corp., provided that at least US$150,000 of expenditure has been funded by Morella. Both Morella and Lithium Corp. have a “right of first refusal” over any potential sale of their respective equity interest in the NBS Project.
For further information please visit: https://www.morellacorp.com/
