Lithium Power International to Consolidate 100% Ownership of Maricunga Lithium Brine Project

Lithium Power International Limited (ASX: LPI) (“LPI” or the “Company”) is pleased to announce it has entered into definitive binding agreements to consolidate 100% ownership of the Maricunga Lithium Brine project in Chile (“Maricunga” or the “Project”) via two all scrip mergers with its joint venture partners Minera Salar Blanco SpA (“MSB SpA”) and Bearing Lithium Corp. (BRZ:TSXV) (“Bearing”) (together the “JV Partners”) (individually the “Transaction” or together the “Transactions”).

HIGHLIGHTS

• LPI to consolidate 100% ownership of the Maricunga brine project, by way of a three-party all-scrip merger with its JV Partners MSB SpA (owner of 31.31% of Maricunga) and TSXV listed Bearing Lithium (17.14%)
• The Transactions increase the current LPI shareholders’ proportionate interest in Maricunga from the current 51.55% to ~57.9%1
• LPI will consolidate the ~48.45% of the Project that it does not currently own at a valuation which is a discount of ~17.1%2 compared with LPI’s current look through value of Maricung
• LPI holding 100% ownership of the Project will simplify decision-making and provides the optimal structure to oversee the rapid development of Maricunga
  
• Consolidation of 100% of the Project’s ownership will de-risk the funding pathway and enhance LPI’s ability to source capital for the development of Maricunga from a wider range of providers when compared with the existing joint venture ownership structure
• Consideration will be paid in LPI shares thereby allowing the shareholders of the JV Partners to retain exposure to the NPV8 US$1.4b Project3
• The Transactions have been unanimously endorsed by the Boards of LPI, Bearing and MSB SpA, with the LPI Board (other than Mr Martin Borda who abstained due to him being the ultimate controller of MSB SpA) recommending that LPI shareholders vote in favour of the Transactions at the upcoming shareholder meeting

The Company currently owns a 51.55% interest in Maricunga, with JV Partners MSB SpA holding 31.31% and Bearing holding 17.14%. The consolidation of ownership will be undertaken via two separate transactions:

• MSB SpA will contribute its 31.31% interest in Maricunga to Delaware company, Salar Blanco, LLC (“SBD”) (which will be a wholly owned subsidiary of MSB SpA). LPI will consolidate ownership of SBD’s interest in the Project via a Delaware merger with SBD (“SBD Transaction”)
• The Transaction with Bearing for its 17.14% interest will be completed by way of a Canadian Plan of Arrangement (“Bearing Transaction”)

As consideration for the Transactions, the Company will issue to the shareholders of SBD and Bearing (respectively):

• to acquire SBD, 161,556,061 ordinary LPI shares to merge with SBD, under the terms of the SBD Transaction; and
• to acquire Bearing, 0.70 ordinary LPI shares:
  • for every Bearing common share on issue, for a total of 76,340,416 LPI shares; and
  • for every Bearing option (“Option”) or Bearing warrant (“Warrant”) that is exercised prior to completion of the Bearing Transaction up to a maximum of 18,204,7984 LPI shares assuming all Options and Warrants are exercised5.

The interests of MSB SpA and Bearing in Maricunga will be acquired at a discount to the estimated see-through market value of Maricunga based on LPI’s traded price. The discount reflects LPI’s position as a majority shareholder and operator, the benefit of LPI’s enhanced and liquid share register relative to its JV Partners, and the respective ownership shareholdings of Bearing and MSB SpA in Maricunga. The Transactions have been structured with reference to LPI’s 1 month volume weighted average price (“VWAP”) which the Company believes is a stable reference point upon which to consider the Transactions. As a result, current LPI shareholders will increase their proportionate interest in Maricunga from 51.55% to ~57.9%6.

The weighted average discount at which the combined Transactions have been undertaken relative to LPI’s look through value is7:

• 17.1% based on LPI’s 1-month VWAP
• 18.5% based on LPI’s 2-month VWAP
• 19.6% based on LPI’s 3-month VWAP

Based on the number of ordinary shares LPI may issue under the Transactions8 the proforma ownership of LPI will comprise ~57.9% LPI current holders, ~26.7% MSB SpA9 and ~15.5% Bearing securityholders (including Option and Warrant holders). The Transactions will, following completion, result in LPI owning 100% of the Project and position the Company to aggressively pursue the rapid development of Maricunga. The Transactions, together with LPI’s previously announced demerger of its WA lithium exploration assets (“WA Demerger”)10, will transform LPI into a focused developer of the wholly owned Maricunga project.

Lithium Power’s Chairman, David Hannon, said:

“We are extremely pleased to have reached an agreement with both MSB SpA and Bearing to consolidate 100% ownership of Maricunga. The updated DFS released on 20 January 2022 demonstrates that Maricunga could be one of the lowest cost producers of lithium carbonate in the world, with the Project’s strong economics underpinning a highly attractive asset.

This transaction is a highly logical step for LPI. By assuming full control of the Project, LPI will create a strong platform from which to develop and fund Maricunga. We look forward to continuing to deliver long-term value for all LPI shareholders, including MSB SpA and the new Bearing shareholders.”

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