Power Metal Resources (LON: POW) shares are rising on Friday after the company said its Canadian subsidiary, Power Metal Resources Canada, has signed an earn-in agreement to potentially acquire a 100% interest in two Canadian lithium pegmatite exploration properties.
Power Metal Canada may earn-in to a 100% interest in the two lithium exploration properties, which are Authier North and Duval East, situated in the Val D'Or mining camp in Quebec, Canada.
The Authier North Property is adjacent to Sayona Mining's (ASX: SYA) flagship Authier Lithium Project which reported JORC compliant total reserves of 12.1Mt at 1.0% Lithium Oxide. Sayona's current market capitalisation is A$393 million.
The Duval East Property is adjacent and east of a northwest-southeast trending lithium pegmatite dyke, drilled in 1955 with reported intersections equivalent to 2m @ 1.38 Li2O1.
The agreement will see Power Metal make initial earn-in payments to the vendors, including a cash payment of C$15,000 (approximately £8,777) and a share-based payment of C$50,000 (around £29,257) through the issue of 1.06 million new ordinary shares in Power Metal at a price of 2.75p per share.
During the first year, Power Metal must spend at least C$25,000 (around £14,628) on exploration costs.
The company will then make cash payments in years two and three, with the total outlay over the three years amounting to approximately £38,034 in cash payments, around £102,399 in share payments, and about £102,399 in work commitments.
Once all of the payments are made, Power Metal Canada will hold a 100% interest in the properties.
Paul Johnson, CEO of Power Metal Resources, commented: “We believe that lithium is an important strategic commodity to have within our portfolio. However, as an exploration and development company what matters most is the quality of opportunity, which we think we have with these two Earn-in properties.
“One property is situated adjacent to a major lithium Reserve that offers significant exploration potential and the second property is interpreted to host the open eastward extension of a historical lithium deposit delineated in the 1950s, which holds potential subject to further drilling.”
The company's share price rose to a high of 2.15p following the news. It is currently down 1.2% at 2.09p.
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