Patriot Lithium has signed a binding term sheet to earn 100% of the lithium rights on Midex's Berens Project in Ontario, Canada, from Midex Resources.

In exchange, Patriot will make $4.6m (A$7.14m) worth of cash payments and shares to Midex over a period of three years.

As per the binding term sheet, Patriot will make an advance payment of $200,000 to Midex.

Midex will then grant a 60-day exclusivity period to Patriot for the completion of due diligence on the Berens project.

During this period, the parties will also negotiate a definitive agreement for the earn-in option agreement, which provides for $1.6m of cash payments on the signing of the agreement.

Furthermore, the agreement will also provide for $3m in additional payments in cash and/or shares.

In a press statement, Midex said: “The issue of consideration shares is subject to Midex's ownership in Patriot not exceeding 19.9% at any time. The earn-in agreement will include standstill restrictions on Midex and its affiliates.”

Midex is expected to retain the exploration and development right to gold/base metal minerals on the Berens project.

Upon completion of the earn-in option, Midex will retain a 2% net smelter return royalty on the lithium minerals mined from certain parts of the project.

Midex president and CEO David Jamieson said: "We are pleased to have entered into this transaction with Patriot, which provides for significant upfront and ongoing value for Midex shareholders.

“Midex will be able to access funding for both the Crescent Lake project and our ongoing exploration plan in the region as a result of the provisions of this earn-in agreement and the associated earn-in payments. We see tremendous upside and believe our Crescent Lake project can quickly grow to become a significant permitted lithium project in the area."