In the deal, Lithium Australia will receive all lithium rights over three licences that dominate coverage of the Lake Johnston lithium pegmatite field.
Sampling by Poseidon on an adjacent tenement has produced high grade lithium assays of up to 3.85% lithium.
Adrian Griffin, managing director, commented: "Lake Johnston is a significant addition to Lithium Australia's Yilgarn asset base, and the deal with US Masters puts us in the box seat in that area.
"While previous exploration ignored the lithium potential of the pegmatites, recent exploration has demonstrated conclusively the prospectivity of the area."
Leading into the transaction, US Masters owned two exploration licences - E63/1722 and 1733, and Lithium Australia owned a single uncontested application for E63/1777.
The two exploration licences owned by US Masters make up the vast majority of the total land encompassed by the pooled land holding.
Under the agreement:
- LIT will acquire the lithium rights in relation to E63/1722 and 1733 from USH;
- LIT will issue 9 million fully paid ordinary shares to USH for the lithium rights;
- 4.5 million shares will be escrowed for three months;
-USH will acquire the gold and nickel rights in relation to E63/1777 from LIT;
- USH will issue 3 million ordinary shares to LIT for the gold and nickel rights; and
- LIT and USH grant a reciprocal first right of refusal with respect to the sale of the underlying tenure of the tenements.
The deal gives Lithium Australia a commanding land position in a proven lithium pegmatite field.
The transaction also provides Lithium Australia with exposure to exploration success by US Masters.
Recent sampling by Poseidon on an adjacent tenement saw a number of high grade results ranging from 2.80% lithium to 3.85% lithium.
This builds on a number of alliances Lithium Australia has formed in Western Australia as it continues to build its lithium portfolio.
Alliances and joint ventures also mean technical resources are pooled and exploration costs are shared.
This portfolio of lithium projects in Western Australia, Northern Territory and Mexico continues to produce steady news flow.
The company is to begin a 35 hole drill program at the Ravensthorpe lithium project, located 10 kilometres west of the Mt Cattlin lithium mine in Western Australia.
Lithium Australia's share price is up 220% over the past 12 months currently trading at $0.26 per share.
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