Australia-based Red Mountain Mining has signed a farm-in agreement with LBM (Aust), a wholly owned subsidiary of Liontown Resources, to acquire an 80% stake in the latter’s Monjebup rare earth project in Western Australia.

Located approximately 80km northeast of Albany, the Monjebup project comprises 321 blocks covering an area of nearly 910km2.

The project consists of three large exploration licenses namely, E70/6042, E70/6043, and E70/6044.

Under the terms of the binding farm-in agreement, Red Mountain Mining can acquire the majority stake in the rare earths project by spending at least A$500,000 ($332,22.5) in exploration expenditure within a period of 24 months.

Red Mountain Mining will issue an aggregate of 40 million of its fully paid ordinary shares to Liontown Resources within five business days from the execution of the agreement.

Following the acquisition of the interest in the Monjebup rare earth project, Red Mountain Mining will grant LBM a 2% net smelter royalty on the minerals drawn and sold from the project.

The net smelter royalty is attributable to the Australia-based company’s participating interest in the Monjebup rare earth project.

Besides, both companies will establish an unincorporated joint venture (JV), subject to satisfying farm-in exploration requirement.

Red Mountain Mining chairman Troy Flannery said: “This is an exciting opportunity for Red Mountain to transact with a globally recognised multi-billion dollar Australian resource company such as Liontown.

“The Company looks forward to commencing initial exploration work on the Monjebup grounds, which has previously delivered highly anomolous soil sampling results up to 969ppm total rare earth oxide (TREO).”