Azimut Exploration, Rio Tinto sign agreements for Corvet, Kaanaayaa properties

Azimut Exploration (AZMTF) announced the signing of two Option to Joint Venture Agreements with Rio Tinto Exploration Canada (RIO) for its wholly-owned Corvet and Kaanaayaa lithium properties. The Agreements contemplate an aggregate value of up to C$115.7M in expenditures and cash payments. The Properties are located in Quebec’s Eeyou Istchee James Bay region. Under the Agreements, Rio Tinto can acquire an initial 50% interest on each of the Properties from Azimut over four years by funding $7M in exploration expenditures and by making cash payments totalling $850,000 per property. Azimut will be the operator during this first option phase. Exploration expenditures and cash payments, including a firm commitment of $1.5M per property in the first 12 months, will initiate following the lifting of wildfire restrictions in Quebec. Rio Tinto can earn an additional 20% interest over five years with further work expenditures of $50M per property. Rio Tinto will act as the operator during this second option phase. Azimut holds the right, should it choose, to be funded to production by way of secured loan from Rio Tinto by granting Rio Tinto an additional 5% interest in the Properties. The first-year exploration program will aggressively assess and test the lithium potential of the Properties. The Properties display significant lithium exploration potential supported by regional geoscientific data and their strategic locations relative to a major emerging lithium district. The Corvet Property is 33 kilometres long and straddles a major tectonic boundary. The main geological features of interest are granitic intrusions surrounded by paragneiss. The Property covers an outstanding exploration target represented by an extensive and prominent 26-kilometre-long lithium anomaly in lake sediments coupled with strong cesium, rubidium, gallium and tin footprints. The Kaanaayaa Property is 25.6 kilometres long and hosts several granitic intrusions surrounded by paragneiss and metavolcanics, including ultramafic rocks. Several coincidental Li-Cs-Rb-Ga anomalies have been identified from detailed multi-element lake sediment geochemistry. While the exploration programs under the Agreements will focus on identifying lithium-cesium-tantalum pegmatites, both Properties also have strong potential for intrusion-related gold-copper and magmatic nickel-copper-cobalt mineralization. Each property is subject to its own Agreement, whereby Rio Tinto can acquire an initial 50% interest in the property by fulfiling the following conditions over four years: Funding work expenditures of $1,500,000 in the first year and $5,500,000 in subsequent years for a total of $7,000,000 per property. Making cash payments of $250,000 on signing within 45 days of the Commencement Date and $150,000 on each anniversary of the Commencement Date, for a total of $850,000 per property. Upon earning a 50% interest, Rio Tinto can earn an additional 20% by funding work expenditures of $50 million over five years per property. Rio Tinto will act as the operator during this second option phase. Upon Rio Tinto earning a 70% interest, Azimut will have the option to be funded to production by way of secured loan from Rio Tinto in exchange for an additional 5% interest in the property. At this stage, the respective interests in the property will be Azimut 25%, Rio Tinto 75%. If exercised, the loan shall accrue interest at the SOFR + 4.5% per annum, to be paid back from 50% of the cash flow from production. The parties are dealing at arm’s length. The Agreements remain subject to regulatory approvals by the TSX Venture Exchange.