Li-FT Power, which has Canada’s third-largest hard rock lithium resource, said this week that an unnamed investor is buying 9.99% of the company for C$21.3 million.
The junior, which acquired the Yellowknife project in The Northwest Territories two years ago, is selling 2.7 million shares for C$5.6575 apiece in an unbrokered private placement that’s due to close by Nov. 12. The deal included an additional 1.6 million shares at $3.65 each to the same shareholder.
The capital raising is excellent news for Li-FT as it’s now likely fully funded with C$27 million for a Yellowknife preliminary economic assessment due by next June and environmental studies for permitting, Cormark Securities mining analyst Shannon Gill said in a note on Friday.
“The strategic investment is another positive indicator for the sector, and hard rock lithium assets in particular,” Gill said.
“Continued M&A in the lithium space supports a potential pricing floor — recalling SQM (NYSE: SQM) and Hancock Prospecting’s May takeover of pre-resource Azure Minerals for a more than 40% premium and Pilbara Minerals’ (ASX: PLS) 67% premium offer to acquire Brazilian developer Latin Resources in August.”
Secrecy trend?
The secret investment could be part of a mini-trend among juniors after undisclosed investors bought the same stakes in Asante Gold (CSE: ASE) in September to expand gold mines in Ghana, Collective Mining (TSX: CNL; NYSE: CNL) in March for its Colombian properties and Foran Mining (TSX: FOM) last December. There was also TDG Gold (TSXV: TDG) last October.
The C$200 million financing for Foran to advance its McIlvenna Bay copper-zinc-gold-silver project was a mixture of equity and debt. It included the Ontario Teachers’ Pension Fund and Fairfax Financial. Fairfax holds 23% of Foran after C$360 million in financing this year, which also saw Agnico Eagle Mines (TSX: AEM; NYSE: AEM) take a 9.9% stake.
The TDG Gold investment was part of a private placement aimed at raising C$2.75 million. The proceeds targeted exploration at TDG’s projects in British Columbia, including the former producing Shasta gold-silver mine in the Toodoggone district.
Securities rules allow a backer to buy less than 10% of a publicly traded company anonymously. However, companies with 5% who are intending to buy more must notify the market, and investments considered material to the company must usually be disclosed in quarterly financial statements.
Li-FT CEO Francis MacDonald may comment on the undisclosed investor when the financing closes, investor relations manager Daniel Gordon told The Northern Miner Group by email on Friday.
Shares in Li-FT Power closed C$0.02 higher at C$4.00 apiece on Wednesday in Toronto after the financing news. They were at C$3.92 by mid-afternoon Friday, valuing the company at C$154.6 million.
Yellowknife project
Li-FT said the financing would be used to advance the resource-stage Yellowknife project with more exploration as it plans the economic study by June.
Cormark’s Gill noted the project consists of clustered spodumene pegmatite dykes – similar to Sigma Lithium‘s (TSXV: SGML; NASDAQ: SGML) Grota do Cirilo project in Brazil – in a mining-friendly jurisdiction adjacent to the Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) and De Beers diamond operations. He said the project could potentially generate 112 million tonnes of ore and has a skilled technical team behind it.
“As first movers in lithium exploration in the area, Li-FT’s land package hosts high potential for additional regional success as it continues to explore,” Gill said.
“Along with a responsible approach to land use that involves all stakeholders and proximity to road and rail infrastructure, Li-FT’s potentially generational Yellowknife project should set it apart from its peers in attracting future development partners and offtake agreements — necessities for developing North America’s future lithium assets.”
The project comprises seven targets along the all-season Ingraham Trail highway. The site hosts 50.4 million inferred tonnes grading 1% lithium oxide (Li2O) for 506,000 tonnes of Li2O, or 1.25 million tonnes of lithium carbonate-equivalent, according to the resource issued this month.
CEO MacDonald said at the time the resource ranked among the 10 largest hard-rock projects in the Americas and had “excellent potential to significantly grow through further drill programs.”
