Advantage Lithium Firms up Argentine Property Acquisition

Advantage Lithium Corp. (TSXV:AAL; OTCQX:AVLIF) has entered into a definitive purchase agreement with Orocobre Ltd. and Miguel Alberto Peral to indirectly acquire an initial 50-per-cent interest, with an option to acquire a total of 75 per cent, in Orocobre’s Cauchari project and a 100-per-cent interest in five lithium brine properties located in the northern provinces of Jujuy, Salta and Catamarca in Argentina’s lithium triangle.
Transaction Highlights
Advantage Lithium Financing. The Company closed its previously announced private placement financing of 26,667,000 subscription receipts of the Company for aggregate proceeds of approximately C$20 million to finance the transaction (the “Financing”). In accordance with the Subscription Receipts Agreement, the gross proceeds of the Financing are held in escrow pending satisfaction of the escrow release conditions which includes the completion of the transaction (the “Closing”) on or before March 31, 2017.
Up to 75% Interest in the Cauchari Project, host to an inferred lithium potash resource containing an estimated 470,000 tonnes of lithium carbonate and 1.62 million tonnes of potash. SAS will acquire an immediate initial 50% interest in the Cauchari project at the Closing, with the right to earn an additional 25% interest upon incurring exploration expenditure of US$5 million over 3 years or completing a NI 43-101 feasibility study in that period, all pursuant to the JV Agreement (as defined below).
Orocobre and Peral will acquire 46,325,000 and 8,175,000 shares of the Company, respectively, with share lock-up to apply post-closing. A pooling agreement will be entered into between the Company, Orocobre, Peral and certain Advantage Lithium insiders at the Closing, pursuant to which the parties will agree not to sell their shares of Advantage Lithium for staged periods at 12, 18 and 24 months after the Closing (subject to customary exceptions).
Orocobre and Peral will acquire 2,550,000 and 450,000 warrants of the Company, respectively. Each warrant is on the same terms as issued by Advantage in the Financing, exercisable for one share of the Company at an exercise price of $1.00 per share for a period of two years.
Investor Rights Agreement. The Company, Orocobre and Peral will enter into a customary investor rights agreement at the Closing that will provide for matters including pre-emptive rights, size and composition of the Company’s board, voting of the Company shares and demand and piggyback registration rights.
Royalty agreement. Orocobre will retain a 1% royalty on the Cauchari properties as will be set out in a royalty agreement to be entered into in connection with the Closing.
Finder’s Fee. The Company entered into a finder’s fee agreement with an arm’s length party (the “Finder”) whereby, at the Closing, the Company will pay to the Finder a cash payment of US$50,000 and issue 150,000 common shares, subject to the approval of the TSX-V.
The indirect acquisition of the Argentine Properties will occur by way of the Company acquiring all of the issued and outstanding securities of South American Salars Minerals Pty. Ltd. which owns all of the issued and outstanding shares of South American Salars (“SAS”) which owns the Argentine Properties. Prior to Closing, SAS, which will become the Company’s subsidiary at Closing, will enter into a joint venture agreement with an affiliate of Orocobre, whereby SAS may acquire an additional 25% interest for a total of 75% interest in the Cauchari Project (the “JV Agreement”).
David Sidoo, President and CEO, of Advantage Lithium, commented, “Signing of the share purchase agreement brings us one step closer to creating an exploration company in Argentina without peer. We are excited to form a partnership with Orocobre, which is not only one of the country’s leading lithium producers, but one of the largest lithium producers in the world.”
Richard Seville, CEO and Managing Director, of Orocobre, said, “Partnering with Advantage Lithium is expected to allow a rapid development of the Cauchari Project without additional capital from Orocobre shareholders. We look forward to closely working with Advantage Lithium’s award-winning technical team in further advancement of the project.”
The technical information in this news release has been reviewed and approved on behalf of the Company by Ross McElroy, P.Geo. Technical Advisor and Director for Advantage Lithium Corp., and a “Qualified Person” as defined in NI 43-101.
About Advantage Lithium Corp.
Advantage Lithium Corp. is a resource company specializing in the strategic acquisition, exploration and development of lithium properties and is headquartered in Vancouver, British Columbia. The common shares of the company are listed on the TSX Venture Exchange (TSX VENTURE:AAL), and the company is also traded on the OTCQX Best Market in the U.S. (OTCQX:AVLIF). The company has entered into a definitive purchase agreement with lithium producer, Orocobre, subject to TSX approval, to acquire 100% interest in five projects in Argentina and up to a 75% interest in a sixth, called Cauchari. Cauchari is host to a near-surface estimated inferred resource of 230 million cubic metres of brine at 380 mg/l Lithium that equates to 470,000 tonnes of lithium carbonate (LCE), and a large exploration target of 5.6mt to 0.25mt of LCE and 19mt to 0.9 of KCL. Cauchari is located just 20 km south Orocobre’s flagship Olaroz Lithium Facility. The Company is also earning an interest from Nevada Sunrise Gold Corp., in a portfolio of five lithium brine projects in the Clayton and Lida Valley regions of Nevada, USA, including 70% in Clayton NE. In addition, the Company has acquired 100% of the Stella Marys lithium brine project, immediately adjacent to Orocobre’s Salinas Grandes project that hosts an inferred, near-surface resource, in Argentina’s Lithium Triangle.
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