Lithium Australia Limited (ASX: LIT) has entered into a binding agreement with Charger Metals NL for the sale of the company’s remaining 30% interest in the Lake Johnston Lithium Project in Western Australia.
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. 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%.
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.
“Our primary focus areas are the growth of our battery recycling division and commercialization of lithium ferro phosphate (LFP) cathode powders,” Lithium Australia CEO, Simon Linge, said.
“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 realized should there be an opportunity to advance a core project of the company.”
For further information please visit: https://www.lithium-au.com/