Shares in Argonaut Resources (ASX:ARE) are expected to climb after the company secured an exclusive option to acquire 100% of the Crescent Lake Lithium Project.

Several internationally significant hard rock lithium deposits occur in the region.

The project consists of two adjacent lithium deposits 250 kilometres NNW of Thunder Bay in Ontario Canada.

The Crescent Lake lithium deposits are hard rock ‘complex-type/spodumene sub-type’ pegmatite deposits.

They are defined by two phases of drilling: historic diamond core drilling undertaken in the 1950s; and limited modern diamond drilling completed in 2011 plus trench sampling.

The lithium market is known to be in short supply due to the sharp increase in demand for lithium-ion batteries used in electric cars and domestic power storage systems.

The price of 99%-pure lithium carbonate imported to China more than
doubled to $13000/tonne in December 2015.


Option agreement to acquire 100%

A subsidiary of Argonaut entered an option agreement with Canadian Orebodies Inc. with the principal terms:

- COB grants Argonaut an exclusive option to conduct a due diligence study on the Crescent Lake Project for a period of six weeks in return for a payment of C$20000.
- The Option defines the material terms of a definitive agreement.
- Argonaut may exercise the Option by paying COB C$50000.
- An interim option fee of C$150000 is due on 1 July 2016.
- Argonaut will then have until 30 November 2016 to complete its assessment of the project at which time it can elect to purchase 100% the Crescent Lake Project for C$200000.
- The following milestone payments are also defined in the Option:
- C$400000 in cash or shares payable to COB on announcement of a maiden resource; and
- C$1000000 in cash or shares payable to COB on decision to mine.
- Claims are subject to a 2% royalty payable to historic vendors.

The transaction may be subject to ASX approval.


Project details

The project consists of 12 claim areas in two clusters. These areas are accessible by road from Thunder Bay via Armstrong Station.

A class-one railway line runs within 20 kilometres of the project area and Armstrong (railway) Station is located 75 kilometres to the south-west.

The rail network interconnects with the US.

The Port of Thunder Bay is a major facility that ships grain coal liquids and general cargo via the Great Lakes to the Atlantic Ocean.

Electricity substations and gas pipelines are located between Lake Superior and Lake Nipigon 50-60 kilometres south of the project area.


Regional lithium deposits

Several internationally significant hard rock lithium deposits occur in the region.

Tanco Mine: is an underground lithium caesium and tantalum mine located in Manitoba Province 500 kilometres west of Crescent Lake. The Tanco ore body is also pegmatitic.

Separation Rapids: is a complex-type lithium pegmatite deposit located 440 kilometres west of Crescent Lake within the same geological sub-province.

Georgia Lake: spodumene pegmatite deposit located 60km south of the Crescent Lake Project.

Seymour Lake: is a Lithium-Beryllium-Tantalum pegmatite deposit located 10 kilometres west of the Crescent Lake Project.


Analysis

The combination of a secure mining jurisdiction defined lithium mineralisation and easy rail access to U.S. battery manufacturing facilities makes the Crescent Lake Lithium Project an extremely attractive investment opportunity.

Argonaut considers claim areas under option to have strong potential for the discovery of additional deposits.

Considering several internationally significant hard rock lithium deposits occur in the region the potential upside for Argonaut is significant.

Proactive Investors is a global leader reporting financial news media research and hosts events for listed emerging growth companies and investors across four continents.