Diversified minerals company Power Minerals has signed a binding term sheet to purchase the Argentinian lithium subsidiaries of Canadian-listed Ultra Lithium Inc.
Ultra Lithium holds 100% equity in the 75.68 square kilometre Laguna Verde lithium brine project in Catamarca Province, plus 2500 square kilometres of prospective properties in the world-renowned lithium triangle of north-west Argentina.
Consideration for the acquisition will be by way of ordinary shares in Power Minerals issued to Ultra Lithium in two equal tranches.
The first tranche of 25 million shares will be issued once the relevant regulatory and shareholder approvals are received by both companies.
The second tranche of 25 performance rights will be issued subject to the definition of a mineral resource of 2 million tonnes grading at least 350 parts per million lithium carbonate equivalent within six months and based on drilling results already conducted by Ultra Lithium.
Shares issued to Ultra Lithium from both tranches will be subject to a one-year escrow period.
Secured loan
In addition to the tranches, Power will provide Ultra with a $1.13 million secured convertible loan to facilitate the transaction, secured by Ultra’s lithium-brine projects.
The utilised amount of the loan will be deducted from the number of shares to be issued at a presumed value of $0.35 per share.
If the transaction does not proceed, the loan will be fully repayable to Power.
Lithium strategy
The acquisition of Ultra’s lithium assets is reported to align with Power’s strategy of becoming a leading lithium brine developer in Argentina, and complements the company’s core focus of developing its Salta project with direct lithium extraction partners.
It will expand Power’s portfolio of lithium assets in Argentina to more than 2830sqkm, making it one of the largest lithium landholders in the region and providing it with a significant pipeline of development projects.
Power managing director Mena Habib said the transaction would provide an opportunity to expand the company’s footprint in the “world’s best lithium address”.
“This strategic acquisition comes at an opportune time as interest and demand in Argentinian lithium brine continues to increase,” he said.
“We aim to take advantage of this opportunity with the delineation of a mineral resource estimate for Laguna Verde in the second half of the year, using results from Ultra’s recent drilling and to complement our ongoing resource expansion work at Salta.”
Chief executive appointment
On completion of the acquisition, Power will appoint Ultra chief executive officer Dr Weiguo Lang to the role of chief executive officer (Argentina operations).
Dr Lang has more than 20 years’ experience in the mining, technology and agriculture industries, with a focus on building strategic alliances, joint ventures and financing.
He is the executive director of Hong Kong-listed company Zhongsheng Resources Holdings, primarily responsible for business development and investment.
He has also held directorships with Klondex Mines, Agro International Inc, Zhongrun (Tianjin) Mining Development Co, Ventek Systems Inc and Q-Net Technologies Inc.
Dr Lang has an engineering postgraduate degree from Agriculture University of Heilongjiang in China, and engineering masters and doctorate degrees from the University of Saskatchewan in Canada.
Santa Ines divestment
Power today announced it would divest its Santa Ines copper-gold project in Argentina to Chinese investment house Fuyang Mingjin New Energy Development Co for $1.5 million cash.
The non-core asset is being offloaded to allow the company to focus on its lithium strategy, with the proceeds put towards advancing the Salta project.
Mingjin’s purchase follows its $2.6m strategic investment in Power earlier this month, via a subscription for 6.5 million Power shares at $0.40 each.
The placement gave Mingjin an 8.9% shareholding in Power.
Mingjin has existing cornerstone equity investments in ASX-listed lithium companies Octava Minerals and Patagonia Lithium.
