Lithium Power International (LPI) has struck a huge $A30m deal with critical minerals major Albemarle to transfer ownership of its wholly-owned Australian subsidiary, Western Lithium.
Albemarle is set to gain full ownership of Western Lithium as part of the deal. This is in light of Lithium Power International’s plans to form a separate company that will list on the ASX.
In January 2022, LPI announced plans to spin out its hard rock lithium assets in Western Australia. The deal with Albemarle solidifies these plans and will establish Lithium Power’s position as a separate vehicle on the ASX.
How will the deal affect shareholders?
While the plans were already well advanced, the subdued capital market conditions and the subsequent offer from Albemarle have swayed the Lithium Power International board to accept the offer.
The company says the conditions of the deal will provide better value and less risk to shareholders than continuing with the listing on the ASX.
Cristobal Garcia-Huidobro, CEO of LPI, explained: “This agreement with Albemarle provides Lithium Power with immediate value for our Western Lithium subsidiary company.
“Despite the significant progress we had made towards an initial public offering (IPO) of Western Lithium in the past months, this asset realisation will provide a significant uplift to the pre-money valuation of our Western Australia asset portfolio.”
Garcia-Huidobro added: “It will add significant cash to the company’s balance sheet and is non-dilutionary to Lithium Power International shareholders, as the financing process of our flagship Maricunga project in Chile continues moving forward.”
When will the deal become effective?
It is unlikely that the transaction will face any other conditions. Therefore, it is expected to become effective around 3 July.
On completion of the sale, Lithium Power International will receive $29m in cash, subject to customary price adjustments. This transaction provides significant non-dilutive balance sheet strength to support financing and offtake negotiations with international financing institutions.
The balance of payment is to be received if certain tenement applications are granted within 18 months of completion.
