Mineral Resources Limited (ASX: MIN), known as MinRes, has recently entered into a Binding Heads of Agreement with Poseidon Nickel Limited (ASX: POS), subject to certain conditions, to acquire the Lake Johnston nickel concentrator plant and associated tenure. This strategic move by MinRes aims to transform Lake Johnston into a lithium processing hub situated in the southern Goldfields region. The acquisition is strategically aligned with MinRes' overarching strategy, which involves processing fines sourced from the Company's Bald Hill and Mt Marion lithium operations, as well as incorporating new discoveries made in the region, and processing third-party ore in exchange for project equity.

Lake Johnston currently operates as a nickel concentrator plant featuring a flotation circuit with a front-end capacity of 1.5 million tonnes per annum. This infrastructure holds the potential to be converted for the treatment of lithium ores, including dense media separation fines. Notably, the tenure for this asset is licensed until 2041, and it holds an active groundwater extraction license. The on-site amenities comprise an airstrip, accommodation for 200 individuals, electrical infrastructure, workshops, and laboratories. Internal assessments conducted by MinRes have indicated that repurposing a brownfields site such as Lake Johnston would significantly reduce approval timelines by approximately two years compared to establishing a greenfields development, in addition to yielding substantial capital savings.

Situated approximately 185 kilometers southwest of Kalgoorlie, the acquired tenure encompasses an area of 86km², comprising one exploration license and 10 mining leases. MinRes will assume full ownership of the tenure, including all associated mineral rights.

Under the terms of the agreement, MinRes will make a payment of $1 million upon execution of the Binding Heads of Agreement, followed by payments of $6.5 million upon completion of the Sale and Purchase Agreement and $7.5 million twelve months after completion.

However, the completion of the transaction is contingent upon the fulfillment of certain conditions precedent, including the completion of legal due diligence of the sale assets to the reasonable satisfaction of MinRes, the assignment of third-party agreements on terms acceptable to MinRes, and obtaining consent from the Minister for Mines and Petroleum under the Mining Act for the transfer of all rights and obligations concerning the tenements. Further details regarding transaction terms can be found in Poseidon's announcement released on the same date.

This endeavor presents an exciting opportunity for MinRes to establish its third lithium processing hub in the Goldfields region, marking the first to include flotation capacity to treat fines. MinRes intends to leverage its expertise in spodumene production to maximize the potential of Lake Johnston, positioning it to serve projects across the world's most promising lithium-rich region.