Australian Mineral Resources Corporation says to sell a minority stake in the lithium project

Melbourne (Reuters) - Mining services provider Mineral Resources Ltd. (MIN.AX) said on Tuesday it intends to sell a minority stake in the Wodgina lithium mine in west Australia.

The Australian company said in a statement that it is seeking partners to account for 49% of the Pilbara region after receiving unsolicited methods from parties interested in participating in the share or off-take agreement project.

In response to the wave of demand for minerals used in electric vehicle batteries, the company has partnered with Jiangxi Lifeng Lithium, China's largest lithium producer, to develop its MountMarion lithium project in the same state.

“This minority sales process is in line with (our) the strategy of investing in early projects, adding significant value and then seeking equity partners to share value,” managing director Chris Ellison said in a statement.

The Wodgina project produced approximately 1.16 million metric tons of lithium direct transport ore (DSO) in the quarter ending March, accounting for a significant portion of the company's overall production.

“(Mineral Resources) will only introduce project partners if they can ensure acceptable terms. (The company) has the ability to fund Wodgina and implement its downstream processing strategy,” adds Ellison.

The equity sale was carried out at a time of booming industry consolidation, and Australian lithium mining giant Galaxy Resources (GXY.AX) is evaluating its stake in large lithium mines in Argentina.

MineralResources said that lithium battery processors, battery manufacturers, international trading companies and car manufacturers have already approached through Vodgina.

Larry Hill, an analyst at CanaccordGenuity, said: "MinRes has become accustomed to building a joint venture on a project." He added that competitors will be companies that can process minerals into battery-ready forms.

As part of the transaction, mineral resources companies may also consider selling their projects to partners. Interest in Australian hard rock deposits is increasing as manufacturers want to ensure high purity supplies.

Vogina is one of the world's largest hard rock deposits and is also located near the port of Hedland, a large bulk carrier.

Investment bank Macquarie Capital (Australia) and Australian law firms Gilbert and Tobin have been appointed to assist in the sale. MineralResources said it plans to announce buyers in the second half of this year.

The company's share price rose about 0.6%, while the broader market rose 0.5%.

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