Australian iron ore company Pantera has agreed to acquire all the shares of Daytona Lithium, a lithium mining company with operations in Southwest Arkansas, for a total equity value of A$6.3m ($4.1m).

Under the terms of the agreement, Pantera will issue fully paid ordinary shares of the company, partly issued upon settlement of the transaction and partly upon the satisfaction of milestones.

The issue of the consideration shares is subject to Pantera obtaining shareholder approval at an extraordinary general meeting, which is expected to be held in early February 2024.

The Australian company will support the acquisition with a two-tranche placement of 40,000,000 shares at A$0.05 per share to raise A$2m at a strike price of A$0.10 for a term of three years.

Pantera will fund the continued acreage acquisition, project exploration and development of the Superbird lithium project, along with its current projects.

PAC Partners Securities served as lead manager to the placement, which will receive 4% of the funds raised under the placement as a selling fee and 2% as a management fee.

Pantera CEO Matt Hansen said: “With the US turning its attention to the region to produce the critical minerals needed for the EV and battery revolution through production of its lithium-rich saltwater brine, the company is walking in the valley of giants, directly competing with Exxon Mobil, Standard Lithium and Albemarle for access to the best ground in the region.

“In the near term, we look forward to drilling wells and gathering samples to produce a Resource and develop our knowledge of the extensive, porous, and permeable limestone aquifer, which is host to the lithium-rich brine.

“Longer term, the Company has access to the technology that can extract lithium with fewer carbon emissions forming part of the industry that will strengthen supply security for the companies investing in EV and battery manufacturing facilities in North America.”

Pantera said the acquisition will strengthen its acreage across Arkansas’ ‘Smackover Formation’, with 10,319 acres under lease and a further 9,000 acres under negotiation.

The Smackover Formation is a significant lithium region featuring prominent participants in the lithium brine industry, including Exxon Mobil, Standard Lithium and Albemarle.

Also, Southwest Arkansas is home to the only large-scale, continuously operating Direct Lithium Extraction (DLE) plant in North America.

Pantera intends to use conventional oil and gas drilling methods to access lithium-rich brine from the Smackover Formation, which is estimated to be 11,000ft underground.

The company plans to use the DLE method to extract lithium rather than hard rock lithium mining.

Hansen added: “The company also warmly welcomes Tim Goldsmith to the project team, Tim was the CEO of Rincon Mining Pty Limited, one of the most advanced DLE lithium-brine companies globally and was responsible for the sale of Rincon to Rio Tinto for $825m.

“He also undertook a complete review of available DLE technology and was instrumental in directing Rincon’s Project Development Team.”