MGX Minerals Inc (CNSX:XMG) shares were nearly 3% higher on Wednesday after the company said it had entered into an arm’s length earn-in agreement with Scientific Metals Corp. (CVE:STM) which allows MGX to acquire an initial 50% interest in the Paradox Basin lithium brine property located in Utah.
The property consists of 111 mineral claims encompassing 2,220 acres located approximately four kilometers’ northwest of Intrepid Potash’s Cane Creek operation.
Approximately eight wells have been drilled on the Property with additional historic wells in the immediate area. Historic exploration, as reported by Southern Natural Gas and documented by the Utah Geological and Mineralogical Survey in 1965, reported 500 ppm lithium from well No. 1 Long Canyon.
Lithium occurs in the basin in oversaturated mineral brine (40% minerals, 60% water) and was discovered during oil exploration when drill wells intercepted the main brine zone (clastic break 31) of the Paradox formation.
Under terms of the Agreement, MGX has the option to acquire a 50% interest in the Paradox Property by: (i) making a cash payment of C$50,000 to STM upon execution of the Agreement; (ii) issuing 150,000 MGX common shares to STM upon execution of the Agreement; and (iii) incurring minimum exploration expenditures on the Paradox Property of no less than C$250,000 over the course of a 12-month period.
If MGX earns its 50% interest, the parties will negotiate and enter into a joint venture agreement pursuant to which the parties shall be equally responsible for all future exploration and development expenses on the Paradox Property.
MGX will have the right to participate in an amount of up to 15% of the gross proceeds of any equity or debt financings of STM for a period of 18 months from the date of execution of the Agreement.
MGX shares were up 2.1% at C$1.41 at time of going to press on Wednesday.
Story by ProactiveInvestors