Alpha Lithium Corporation (TSX.V: ALLI) (OTC: APHLF)
(Frankfurt: 2P62) (“
Alpha” or the
“
Company”) is very pleased to announce a
significant asset transaction with international,
multi-billion-dollar, chemical processing conglomerate, Uranium One
Group (“Uranium One”).
Uranium One’s wholly owned subsidiary, Uranium
One Holding N.V. (“U1”), has agreed to invest US$30 million in
exchange for a 15% ownership stake in Alpha’s 100% owned,
27,500-hectare Tolillar Salar in Argentina (“Tolillar”) and by
doing so will earn an option to acquire another 35% of Tolillar for
US$185 million (the “Option” or the “Earn-in Right”). If the Option
is exercised, Alpha would retain a 50% interest in Tolillar, which
would be fully funded up to the point of commercial production.
The transaction is limited only to Tolillar and
when closed, is expected to leave Alpha with approximately $45
million of cash, free to focus expansion and developmental efforts
on the Company’s nearby assets in the Salar del Hombre Muerto, one
of the world’s most significant sources of lithium.
Alpha has formed a wholly owned subsidiary,
Alpha One Lithium B.V. (“Alpha One”), which will be the sole owner
of Alpha Lithium Argentina S.A., which in turn, will own only the
Tolillar assets. On closing of the transaction, expected January
31, 2022 (the “Closing Date”), U1 will invest US$30 million into
Alpha One and earn a non-operated 15% equity stake. Alpha will
retain full control of Tolillar, management, and the board, and
will be responsible for deploying the invested capital. The primary
use of proceeds will be:
- Additional
developmental drilling and geophysical data gathering;
- Construction of
a permanent on-site camp to house up to 400 personnel;
- Securing of
natural gas, electrical energy, and water supply in sufficient
quantities for commercial production;
- Construction of
a 5 Tonne per Annum (“tpa”) LCE pilot plant to provide proof of
concept of the Tolillar’s flow sheet; and,
- Completion of a
Feasibility Study.
Upon completion of the Feasibility Study, U1
will have the option to acquire an additional 35% of Alpha One for
US$185 million. Depending on the Net Present Value (“NPV”) of
Tolillar, as determined by the Feasibility Study, the Company may
receive a bonus payment (“Additional Consideration”) up to a
maximum amount of US$75 million. The Additional Consideration would
be payable directly to the Company, which would imply a total value
of US$743 million for the Tolillar asset.
Should U1 exercise its Earn-in Right, the
proceeds of the US$185 million equity injection are to be focused
on the construction of an initial 10,000 tpa LCE commercial
production facility. This initial production facility is intended
to be the first module of several, allowing production to be
expanded if and when it is desired. U1’s exercise of the Earn-in
Right would provide them with the following:
- Operatorship of
the Tolillar project;
- Control of the
Board of Directors of Alpha One;
- Marketing rights
for 100% of the market-rate offtake from the 10,000 tpa production
facility, whereby through its ownership percentage of Alpha One,
Alpha would retain 50% of the economics of the offtake;
Brad Nichol, Alpha’s President and CEO
commented, “This early-stage asset has attained a truly
game-changing breakthrough for our shareholders. This sort of
milestone is rarely achieved by a company with less than two years
of operations and with a valuation at this level. Exercising the
Earn-in Right implies a value at Tolillar of US$529 million, not
including any Additional Consideration. Including the maximum
Additional Consideration, the implied project value would be US$604
million, which is over CDN$750 million for the Tolillar asset
alone. Uranium One has the ability to earn a 50% interest in
Tolillar and Alpha will retain a 50% working interest in a salar
that is funded up to the point of commercial production.” Nichol
added, “Having gotten to know Mr. Shutov and his team over the past
few months, I am truly pleased to be partnering with Uranium One,
an internationally recognized, large-scale project developer. I
have no doubt they will match our hunger for fast and full
development of the Tolillar Salar, in addition to offering large
project execution experience and significant downstream contacts in
Europe.”
Andrey Shutov, President of Uranium One stated,
“In alignment with our stated strategy of securing non-uranium
mineral resources, Uranium One is very excited to work with the
famous Alpha Lithium team to advance the Tolillar Project, located
within the renowned Lithium Triangle, the world’s most prolific
lithium region. This partnership agreement represents a scaled
approach to expanding Uranium One’s lithium production, while
allowing Uranium One and Alpha Lithium to collaborate on the
development of Tolillar and implement efficient extraction
technologies.”
The terms of the definitive agreements provide
safeguards that prevent U1 from forcing a capital call or other
dilutive event upon Alpha without recourse, in addition to typical
rights of first refusal, tag-along and drag-along rights.
Additionally, Alpha has an option to sell its equity stake in Alpha
One if U1 were to issue a large capital call associated with a
plant expansion in which Alpha may choose not to participate in. In
this event, Alpha would receive fair market value plus a premium of
25% for its ownership in Alpha One and have a right of first offer
to solicit higher offers.
Additionally, there are no restrictions that
prevent a change of control within Alpha, should Alpha and its
remaining non-Tolillar assets be subject to a corporate acquisition
or similar event.
The Company has entered into definitive
agreements with U1 in respect of the transactions set out herein,
which are subject standard closing conditions including approval of
the transactions contemplated herein by the TSX Venture
Exchange.
It is expected that a finder’s fee equal to 4%
of the initial US$30 million investment will be paid on the Closing
Date to an arms-length third party and is to be settled in common
shares of the Company at the most recent closing price of $1.23 per
share. The shares will be subject to a hold period of four months
plus one day from the date of issuance.
Miller Thomson LLP and Fox Williams LLP acted as
legal counsel to the Company and Fort Capital Partners and
Lionsgate West Capital acted as financial advisors to Alpha with
respect to the transaction.
Michael Rosko, MS, PG, of Montgomery and
Associates (M&A) of Santiago, Chile, is a registered geologist
(CPG) in Arizona, California and Texas, a registered member of the
Society for Mining, Metallurgy and Exploration (SME No. 4064687),
and a qualified person as defined by National Instrument 43-101 -
Standards of Disclosure for Mineral Projects. Mr. Rosko has
extensive experience in salar environments and has been a qualified
person on many lithium brine projects. Mr. Rosko and M&A are
completely independent of Alpha Lithium. Mr. Rosko has reviewed and
approved the scientific and technical content of this news
release.
ON BEHALF OF THE BOARD OF ALPHA LITHIUM
CORPORATION
“Brad Nichol”
Brad NicholPresident, CEO and Director
For more information:Alpha
Lithium Investor Relations Tel: +1 844 592
6337info@alphalithium.com
About Uranium One
Uranium One is one of an international group of
companies, all wholly owned subsidiaries of the Russian State
Atomic Energy Corporation (“Rosatom”), as part of the management
circuit of the TENEX group of companies of the Rosatom State
Corporation. The company manages one of the world's largest uranium
mining holdings with a diversified portfolio of assets, and
develops projects in Kazakhstan, Tanzania, Namibia and in South
America. Rosatom recently assembled a team of lithium industry
experts within Uranium One to focus on constructing one of the
world’s largest lithium portfolios and to become a very significant
provider of battery grade lithium to key international
manufacturers.
About Alpha Lithium (TSX.V: ALLI) (OTC:
APHLF) (Frankfurt: 2P62)
Alpha Lithium is a team of industry
professionals and experienced stakeholders focused on the
development of the Tolillar and Hombre Muerto Salars. In Tolillar,
we have assembled 100% ownership of what may be one of Argentina’s
last undeveloped lithium salars, encompassing 27,500 hectares
(67,954 acres), neighboring multi-billion-dollar lithium players in
the heart of the renowned “Lithium Triangle”. In Hombre Muerto, we
continue to expand our 5,000+ hectare (12,570 acres) foothold in
one of the world’s highest quality and longest producing lithium
salars. Other companies in the area exploring for lithium brines or
currently in production include Orocobre Limited, Galaxy Lithium,
Livent Corporation, and POSCO in Salar del Hombre Muerto; Orocobre
in Salar Olaroz; Eramine SudAmerica S.A. in Salar de Centenario;
and Gangfeng and Lithium Americas in Salar de Cauchari.
Forward-Looking Statements
This news release contains forward-looking
statements and other statements that are not historical facts.
Forward-looking statements are often identified by terms such as
"will", "may", "should", "anticipate", "expects" and similar
expressions. All statements other than statements of historical
fact, included in this news release are forward-looking statements
that involve risks and uncertainties. There can be no assurance
that such statements will prove to be accurate and actual results
and future events could differ materially from those anticipated in
such statements. Important factors that could cause actual results
to differ materially from the Company's expectations include the
results of further brine process testing and exploration and other
risks detailed from time to time in the filings made by the Company
with securities regulators. The reader is cautioned that
assumptions used in the preparation of any forward-looking
information may prove to be incorrect. Events or circumstances may
cause actual results to differ materially from those predicted, as
a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of the Company.
The reader is cautioned not to place undue reliance on any
forward-looking information. Such information, although considered
reasonable by management at the time of preparation, may prove to
be incorrect and actual results may differ materially from those
anticipated. Forward-looking statements contained in this news
release are expressly qualified by this cautionary statement. The
forward-looking statements contained in this news release are made
as of the date of this news release and the Company will update or
revise publicly any of the included forward-looking statements as
expressly required by applicable law.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release. No securities regulatory
authority has reviewed nor accepts responsibility for the adequacy
or accuracy of the content of this news release.
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