Karora Resources (TSX: KRR) has announced its intention to transfer ownership of the Higginsville lithium project in Western Australia into a newly publicly listed exploration company named Kali Metals through a proposed demerger and simultaneous initial public offering. This arrangement is formalized through a shareholders agreement with Kalamazoo Resources (ASX: KZR), who will also be divesting their Australian lithium assets.
Upon listing, Kali Metals will possess a portfolio that includes Kalamazoo’s Marble Bar and DOM’s Hill lithium projects, currently undergoing joint venture exploration with Chilean lithium producer Sociedad Química y Minera de Chile SA, along with lithium mineral rights over a significant portion of Karora’s Higginsville gold tenement package in the Eastern Yilgarn region. Additionally, Kali will hold lithium mineral rights over 2027sqkm of the Jingellic and Tallangatta projects situated in the Lachlan Fold Belt of New South Wales and Victoria.
The newly formed company will be led by a seasoned management team, with Karora managing director Graeme Sloan as the lead and Kalamazoo chief executive officer Luke Reinehr serving as non-executive chairman.
Mr. Reinehr expressed that the divestment will allow Kalamazoo to refocus its energies on its Pilbara gold assets, particularly the Ashburton project, which hosts a significant gold resource. The decision to spin out the Pilbara and Lachlan Fold Belt lithium projects was strategically made to capitalize on the opportunity to join forces with Karora and establish a substantial critical minerals exploration company in Australia.
Kali Metals anticipates raising up to $12 million at IPO to fund the exploration and drilling of its combined Australian lithium portfolio. Kalamazoo shareholders will receive an initial 25% in-specie distribution of Kali shares and have a priority entitlement to subscribe for additional Kali shares at the IPO. Following listing, Kalamazoo will hold a 55% ownership stake in Kali Metals, with Karora retaining the remaining 45%.
The planned listing of Kali Metals on the Australian Stock Exchange under the ticker code KM1 is expected to take place in September.
The Marble Bar and DOM’s Hill lithium projects form part of an exploration joint venture between Kalamazoo and SQM, with Kalamazoo transferring its interest in the joint venture to Kali with SQM’s consent. SQM has the option to earn up to a 70% interest in all mineral rights at Marble Bar and DOM’s Hill by funding $12 million in exploration over the next four years.
The Jingellic and Tallangatta lithium projects are strategic early mover plays with substantial potential for LCT pegmatites and hard-rock tin mineralization. These projects are located in a highly prospective geological setting within the Lachlan Fold Belt, which is known for LCT mineralization.
Karora’s primary focus is on increasing gold production to a targeted range of up to 195,000 ounces by 2024 at its integrated Beta Hunt and Higginsville underground operations. The Higginsville treatment facility, a 1.6 million tonnes per annum processing plant, receives ore from both mines and was complemented by the recent acquisition of the 1.0Mtpa Lakewood gold mill to expand processing capacity.
