European Lithium Ltd. has struck a cash and scrip deal to sell its Paynes Find gold project in Western Australia to Cervantes Gold Pty. Ltd. for A$1.0 million.

As payment for the project, Cervantes will issue 25 million shares worth A$500,000 and make A$500,000 worth of cash payments in stages, according to a Dec. 22 statement.

The bulk of the cash will be paid on completion of the transaction and once Cervantes Gold has raised the A$1.0 million to fund the deal.

European Lithium nonexecutive Chairman Tony Sage said the cash raised will be used to fund the development of the Wolfsberg lithium project in Austria.

The company, which was formerly Paynes Find Gold Ltd., entered the lithium market through its acquisition of European Lithium AT (Investments) Ltd. in September.