Lithium Australia

Lithium Australia Enters Binding Agreement For The Sale Of The Lake Johnston Lithium Project

Lithium Australia (ASX:LIT) (‘Lithium Australia’, or ‘the Company’) is pleased to advise it has entered into a binding agreement with Charger Metals NL (ASX: CHR) (‘Charger Metals’, or ‘Charger’) for the sale of the Company’s remaining 30% interest in the Lake Johnston Lithium Project (‘Acquisition Agreement’).


HIGHLIGHTS

  • Lithium Australia and Charger Metals have entered into a binding agreement, with Charger Metals to acquire Lithium Australia’s remaining 30% interest in the Lake Johnston Lithium Project.
  • Charger Metals to issue Lithium Australia 7,000,000 fully paid ordinary shares in the capital of Charger Metals as consideration for the sale of the Lake Johnston Lithium Project.
  • Charger Metals grants a first right of refusal for offtake of up to 30% of lithium produced by the Lake Johnston Lithium Project to Lithium Australia for future commercial production of lithium ferro phosphate.
  • Completion of the acquisition of the Lake Johnston Lithium Project will be subject to approval from Charger Metals’ shareholders at an upcoming general meeting.
Under the Acquisition Agreement, the Company has agreed to sell, and Charger has agreed to acquire:

(a) the Company’s remaining 30% interest in the Lake Johnston Lithium Project tenements; and
(b) the Company’s remaining 30% interest in the contractual rights to the lithium in the tenements comprising the Lake Johnston Lithium Project.

In consideration for the sale of the remaining 30% interest in the Lake Johnston Lithium Project, Charger will issue the Company 7,000,000 fully paid ordinary shares in the capital of Charger (‘Consideration Shares’). These Consideration Shares represent a value of $2.9M based on the previous closing price of Charger Metals.

Completion of the Acquisition Agreement will be subject to, amongst other things, the receipt of an independent expert’s report by Charger, opining that the acquisition of the remaining 30% interest in the Lake Johnston Lithium Project is fair and reasonable.

As at the date of this announcement, the Company holds a relevant interest of 15.5% in Charger. As the issue of the Consideration Shares will bring the Company’s relevant interest in Charger to 24.0%, the issue of the Consideration Shares to the Company will require the approval of Charger’s shareholders at its upcoming meeting pursuant to Item 7 of Section 611 of the Corporations Act 2001 (Cth) and ASX Listing Rule 10.1. The application of mandatory ASX-escrow to the Consideration Shares remains to be determined.

As part of the Acquisition Agreement, Charger Metals has also granted Lithium Australia a conditional first right of refusal over the lithium product produced from the tenements. The first right of refusal covers lithium product equal to the lower of:

  • 30% of the lithium product produced on the relevant tenements for the term of the agreement reached for the offtake, should a binding agreement be reached; and
  • the lithium product required by Lithium Australia to produce lithium metal phosphate product through a commercial facility(s) in which Lithium Australia has an ownership interest of 25% or more.

To qualify for the first right of refusal, Lithium Australia must make a financial investment decision announcement prior to 31 December 2029 to construct a commercial facility to produce lithium metal phosphate cathode powders.

There have been no other changes to the Original Acquisition and JV Agreement (refer below for details) related to the Coates Ni-Cu-PGE-Project or the Bynoe Lithium and Gold Project.

Comment from Lithium Australia Chief Executive Officer, Simon Linge

“Our primary focus areas are the growth of our battery recycling division and commercialisation of lithium ferro phosphate (‘LFP’) cathode powders.

A key risk for LFP production is the availability of lithium chemicals, which have the potential to become scarce as demand increases for EVs in the future. Importantly, this Acquisition Agreement maintains the Company’s rights for lithium chemicals from the Lake Johnston Lithium Project, defined under the Original Acquisition and JV Agreement.

Converting the prior investment into listed equity ensures that any upside generated by Charger for its Lake Johnston, Bynoe and Coates projects can be more readily realised should there be an opportunity to advance a core project of the Company.”


Click here for the full ASX Release

This article includes content from Lithium Australia, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.

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