Kenorland Minerals has agreed to grant an option to a fully-owned subsidiary of Barrick Gold to acquire a stake of up to 80% in its South Uchi project in Canada.

The gold and lithium project is located within the Birch-Uchi greenstone Belt in the Red Lake district in Northwestern Ontario. It is spread over an area of 65,657ha.

As per the option agreement signed by the parties, Barrick Gold can initially earn a 70% stake in the Canadian project by spending C$6m ($4.7m) in mineral exploration expenditures on or before the sixth year of the agreement. Half of that amount has to be spent within the first three years of the agreement.

Besides, the Canadian gold miner has to deliver a technical report that defines a mineral resource of at least one million ounces of gold for the project.

After earning a 70% stake, Barrick Gold and Kenorland Minerals will create a joint venture for the South Uchi project.

Kenorland Minerals also has the option to relinquish its 30% stake in the joint venture for a net smelter returns royalty interest of 3% on currently unencumbered claims along with 2% on claims currently encumbered by an existing royalty.

Barrick Gold also has an option to increase its stake to 80% in the joint venture by fully funding a feasibility study on or before the completion of 10 years of signing the option agreement.

In case a joint venture participant’s stake dilutes to under 10%, it can exchange its interest for a net smelter returns royalty of 2% on presently unencumbered claims and 1% on claims encumbered currently by an existing royalty.

Kenorland Minerals stated: “In addition to the gold prospectivity, the Project meets many of the criteria for potential lithium pegmatite deposits, including the presence of the large Alison Lake batholith (a fertile peraluminous granite), which is partly covered by the project.

“Numerous lithium pegmatite occurrences are located in the region, including the McCombe deposit (Ardiden Ltd.) located immediately to the east of the Project.”

In November last year, MetalCorp had entered into an earn-in agreement with Barrick Gold for its Hemlo East gold property located about 350km east of Thunder Bay, Ontario.