Pilbara will pay $A4 million cash on completion of the deal, as well as $1 million once the term of an exploration license is extended.

The company will pay a further $3 million in cash or shares on the grant of four exploration licenses within the next 12 months.

Dakota’s Lynas Find project adjoins Pilbara’s Pilgangoora project to the east and north and will nearly double Pilbara’s total landholding.

Yesterday, Dakota announced a maiden indicated and inferred resource of 7.3 million tonnes at 1.25% lithium oxide, 85 parts per million tantalum pentoxide and 0.99% iron oxide.

Pilgangoora already has a resource of 128.6Mt at 1.22% lithium oxide, 138ppm tantalum pentoxide and 0.63% iron oxide.

Pilbara managing director and CEO Ken Brinsden said the acquisition further consolidated the company’s lithium ground and cemented Pilgangoora’s stake as the dominant project.

“The acquisition provides the potential for additional new high-grade satellite ore feed to the central processing plant at Pilgangoora, based on the initial mineral resource for the Lynas Find project reported this week,” he said.

“Importantly, these additional tonnes are located close to surface and are at an attractive average grade which would enhance our overall resource and future reserve inventory.”

Metallurgical test work completed by Dakota indicated that a spodumene concentrate grading more than 6% lithium oxide can be produced, and suggested that dense media separation could be a viable processing route, similar to what is being planned for Pilgangoora.

The Lynas Find ground still remains underexplored, with Dakota only having completed its maiden drilling in April.

“The Dakota tenement package also contains numerous prospective new areas for lithium exploration, helping to strengthen our longer term growth pipeline,” Brinsden said.

“Importantly, this deal also gives us access to a strategic landholding in close proximity to the existing Pilgangoora resource area which may be suitable for the location of key infrastructure components for the Pilgangoora project – enhancing our development plan.”

Pilbara is at the financing stage for Pilgangoora after completing the definitive feasibility study into a $214 million, 2Mt per annum operation last month.

Meanwhile, the deal will allow Dakota to ramp-up its European lithium strategy.

“The directors see this transaction as a win for Dakota shareholders,” CEO David Frances said.

“The transaction puts the company in a very strong financial position to rapidly advance its strategy of becoming a globally significant lithium company and leading supplier of lithium hydroxide and lithium carbonate to the rapidly developing European battery industry.”

Dakota shares rose by 9.5% to 8.1c, while Pilbara was up by 3.7% to 47.7c.