Mineral exploration firm BMG Resources has signed an agreement with Lithium Chile (LCS) to jointly explore and develop three lithium brine projects in Chile.

The companies will form a joint venture (JV) for the development of the projects, which are located in the Chilean region of the ‘lithium triangle’ in the Andes.

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This region encompasses parts of northern Chile, south-west Bolivia and north-west Argentina and hosts more than 50% of the world’s lithium resources.

BMG has been focused on investing in lithium assets in view of the growing demand for the metal from electric vehicles and smartphone manufacturers for use in batteries.

“There is no better entry point than the world’s highest grade, lowest cost brine deposits in Northern Chile.”

The partners will initially focus on three lithium projects areas, Salar West, Pajonales and Natalie, which cover more than 12,000ha.

Over the next year, the JV will focus on completing initial drilling programmes and defining lithium JORC resources within the project areas.

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Under the terms of the agreement, LCS will be the owner of all right, title and interest in the lithium properties and BMG will make an initial $800,000 payment in return for a 20% interest in the JV entity.

BMG can earn a further 30% interest by spending an additional $2.5m in funding to the JV company and issuing $300,000 in shares to LCS.

BMG Resources managing director Bruce McCracken said: “The fundamentals for the Lithium sector remain very positive with strong demand growth from battery requirements for electric vehicles, and there is no better entry point than the world’s highest grade, lowest cost brine deposits in Northern Chile.

“We are working to fast-track the establishment of the JV and progress the work program as quickly as possible. This is a transformative moment for the company and we look forward to updating shareholders as we progress this transaction and transition our focus to the lithium sector.”