London-listed Great Southern Copper (GSC) has executed a binding term sheet for the Monti lithium project, located in the Salar de Atacama district of Chile.

The Monti lithium project comprises 81 concession applications for a total combined concession area of 235 km² in a district renowned as Chile's foremost lithium brine production area.

The terms of the executed term sheet grant GSC full ownership rights of the Monti lithium project upon the issuance of concessions and the fulfillment of option payments.

To initiate this agreement, GSC has completed an initial payment of $10 000 to the vendors. Over the next three years, additional cash and share payments will follow, resulting in a total consideration value of $2.26-million.

This development aligns with GSC's corporate objective of expanding its portfolio by adding a third project. In addition to the Monti lithium project, GSC is actively pursuing copper exploration and is poised to commence drilling at the highly promising Especularita copper/gold targets.

The binding term sheet allows the company to earn 100% of the potential mining rights of the Monti lithium project once granted, subject to the satisfaction of yearly option payments over a four-year period.

"We are very excited by the scale of the opportunity that the Monti lithium project presents and to enter the highly competitive lithium exploration space in Chile. Chile is the world's largest producer of copper and the second-largest producer of lithium. Both metals are considered vital commodities as the world aims to reduce its reliance on fossil fuels and transition to green energy. As such, the Monti lithium project is a natural fit to complement GSC's two copper projects at San Lorenzo and Especularita,” GSC CEO Sam Garrett said on Wednesday.

He noted that the Monti lithium project delivered on the company's strategic objective to add a third project to its portfolio and emphasised the company's enduring and important relationship with in-country partners.

Chile is currently the world's second-largest producer of lithium after Australia. Unlike Australia where lithium is recovered from spodumene-rich pegmatites, lithium in Chile is recovered from salt brine solutions located within and beneath high-altitude geographic depressions known as "salars" or salt lakes.

In the Andean region of South America, lithium-rich salars occur in Bolivia, Argentina and Chile. Total reserves and resources of lithium calculated in Chile are estimated at 14.3-million tonnes, with the Salar de Atacama being the largest lithium-producing salar.

The Chilean government recognises the strategic importance of lithium to the country's economy and has recently moved to address a new model whereby companies wishing to extract and produce lithium are required to enter into contracts with the State, negotiating with government companies Codelco or Enami. Codelco is Chile's State copper mining company and is the largest copper producer globally, while Enami is a State-owned copper and gold/silver production company mandated to purchase and process ores from medium and small-scale copper and gold miners across Chile.

Concerns for the water and environmental impact of evaporation extraction of lithium from brines on the water table of the salars also means that new producers in Chile will be required to use direct lithium extraction technology to recover lithium from brine solutions.

Over the coming months, GSC will conduct due diligence on the project and prepare plans for its exploration programmes. Work will include reconnaissance field trips to undertake surface sampling and mapping programmes.