ASX-listed mineral exploration company Armada Metals has entered a binding term sheet with Brazil-based Antares Minerais Estratégicos to acquire ownership of exploration permits and applications for exploration in Brazil.

This deal covers 14 mineral rights, encompassing a total area of 16,750.28ha in the eastern portion of Minas Gerais.

The mineral rights are divided across four projects, namely Água Boa, Rio Doce, Resplendor and Mendes Pimentel.

Armada has agreed to make a deposit of A$50,000 ($32,730) to execute a binding term sheet for securing exclusivity.

It will be followed by an A$100,000 commitment fee after satisfactory due diligence is completed and the signing of a definitive agreement within 45 days of signing the binding term sheet.

If satisfied with the due diligence, the company will issue 26 million shares to Antares Minerais upon the deal closing.

The company has also committed that during the first year, it will invest a minimum of A$500,000 for exploration works on projects with permits.

This transaction is subject to all relevant third-party and other regulatory approvals along with the grant of permits and transfer of title in the permits to Armada.

Armada non-executive chairman Rick Anthon said: “This is an exciting transaction for Armada as we diversify both geographically and into lithium while remaining in the critical metals space.

“This area in Brazil is attracting significant exploration attention for the potential discovery of lithium-bearing pegmatites, with a number of other operators in the region and known occurrences.

“We can also call upon our in-house experience with lithium and the South American continent. This new planned acquisition, along with our nickel projects in Africa, especially the Bend nickel project in Zimbabwe, where we are currently drilling and results are expected soon, offers an exciting new opportunity to Armada and its shareholders.”

The Água Boa project is located in the municipalities of Itambacuri, São José da Safira and Frei Inocêncio, north of Governador Valadares. It includes three permits with a total area covering 5,699.52ha. 

Rio Doce has five permits and occupies 8,302.72ha of land. It is located close to the municipality of Governador Valadares.

Mendes Pimentel is located close to the municipality of Mendes Pimentel. With two permits, it occupies 918.9ha of land.

The Resplendor project is located in a municipality with the same name. It has four permits and occupies 1,829.14ha.