Hancock Magnetite Holdings has entered a binding agreement to explore and develop lithium at the Mt Bevan site in an area along the Mt Ida Fault, with Legacy Iron (ASX:LCY) and Hawthorn Resources (ASX:HAW).

Hancock has committed to provide $4M for a 7.5% stake and maybe spend up to another $22M to gain an additional 43.5% stake in a project that could produce lithium pegmatite deposits.

"We have a world-class well defined magnetite ore body which sits side by side with a potential new lithium province on the Mt Ida fault and adjacent to Delta Lithium's discovery," said Hawthorn Resources managing director Brian Thornton.

Hawthorn Resources' share price is up 21% at 11:39am AEST.