Lepidico and Desert Lion Energy have entered into a definitive arrangement agreement whereby Lepidico will acquire all of the outstanding common shares of Desert Lion for 5.4 Lepidico ordinary shares for every one Desert Lion share.
|Image courtesy ©Desert Lion Energy|
The Transaction will create a vertically integrated lithium development company from mine to chemical conversion plant by combining Lepidico’s leading proprietary lithium processing technologies with Desert Lion’s lepidolite Mineral Resources and extensive exploration package.
The agreed exchange ratio represents a premium of either 38 per cent based on the closing price of Lepidico and Desert Lion shares on 3 May 2019 or 39 per cent based on the 10-trading day volume weighted average price of the shares. Directors and officers of Desert Lion representing 17 per cent of Desert Lion’s shares on issue have entered into voting and support agreements to vote in favour of the Transaction.
Among others, the transaction will combine two companies with highly complementary assets to create an integrated lithium business which has Lepidico’s innovative L-Max®, LOH-MaxTM and S-MaxTM proprietary process technologies and ore offtake arrangement with Mota Ceramic Solutions from the operational Alvarrões lepidolite mine in Portugal.
Additionally, Desert Lion’s lepidolite deposits in Namibia and partially developed lepidolite concentrator will be added as part of the deal; as will Lepidico’s pilot plant with L-Max® and S-MaxTM capability, which is in the commissioning phase, and the Phase 1 Plant Project, at the advanced stages of feasibility study which contemplates output capacity of 5,000tpa lithium hydroxide.
Lepidico will also undertake a 1 for 9 pro-rata renounceable Entitlements Offer at an issue price of $0.029 to raise up to C$10.8 million for business integration, new development and growth opportunities, with one free attaching option, for every two new shares issued under the offer. The Entitlements Offer is scheduled to close on 29 May 2019.
Lepidico Managing Director Joe Walsh said that closing of these transactions will be transformative for Lepidico.
“They will allow it to advance its technologies and projects to be development ready, and ultimately to deliver on its strategy to fast track the business to free cash flow generation, demonstrate the commercial viability of L-Max® and LOH-MaxTM, and become a globally significant, vertically integrated lithium chemical producer.
The Desert Lion transaction will provide Lepidico with a direct controlling interest in its first quality lepidolite deposit under an awarded mining license, providing a clear path to development.”