TORONTO, June 30, 2017 /CNW/ - LSC Lithium Corporation ("LSC" or together with its subsdiaries, the "Company") (TSXV:LSC) is pleased to announce that further to its news release dated March 15, 2017, the Company has completed the acquisition of LitheA Inc. ("LitheA").
LitheA's portfolio adds another 30,000 hectares to LSC's Argentina exploration portfolio, bringing the Company's portfolio to 15 properties totaling approximately 300,000 hectares. LitheA's principal asset is its Salar de Pozuelos tenements (the "Pozuelos Property") located in the Province of Salta, Argentina. The Pozuelos Property covers approximately 99% of the surface area of the Salar and has been subject to extensive exploration by LitheA since 2008. LSC has been funding Lithea during the option period in order to advance the exploration program at the Pozuelos Property prior to acquisition.
Further details of the Pozuelos Property are set out in the Company's Filing Statement dated January 27, 2017, and news releases dated March 15, 2017 and April 10, 2017. A technical report prepared under NI 43-101 on the Pozuelos Property by Donald H. Hains, P. Geo entitled "Technical Rpeort on the Salar de Pozuelos Project, Salta Province, Argentina" with an effective date of December 31, 2016 will be filed by the Company on SEDAR. Mr. Hains is an independent qualified person under NI 43-101.
TERMS OF THE ACQUISITION OF LITHEA
Pursuant to the option agreement dated November 23, 2016, as amended, between, LitheA, BMC Global Limited ("BMC"), its parent company BMC Holdings Limited ("BMC Holdings"), its beneficial shareholder Ho Sok Lim ("Lim") and LSC Lithium Inc. ("LSC Lithium"), a wholly owned subsidiary of the Company (the "Option Agreement") the Company has (through its subsidiary) acquired all of the issued and outstanding shares of LitheA for an aggregate purchase price of approximately $44 million.
The aggregate purchase price was paid by the issuance of 31,203,355 LSC common shares and the payment of $12,859,848 in cash. In accordance with the terms of the Option Agreement and Put-Call Agreement, the purchase price was satisfied by:
- $9,947,811 cash payment to BMC;
- $1,466,973 offset of principal and accrued interest on indebtedness owed to the Company by BMC Holdings;
- 5,181,347 common shares of the Company issued to Enirgi Group at a price of $0.965 per share
- 22,909,975 common shares of the Company issued to BMC at a price of $0.964 per share;
- $2,912,037 cash payment to Lim; and
- 3,112,033 common shares of the Company issued to Lim at a price of $0.964 per share.
The consideration paid to Lim was made in exchange for the assignment by Lim to LSC Lithium of a loan in the amount of $5.5 million, bearing interest at a rate of 12% per annum and owing by LitheA.
The cash payment to BMC was directed by BMC towards the repayment and discharge of an outstanding loan in the aggregate principal amount of $14,275,816 (plus all accrued interest thereon) which was advanced to BMC Holdings in November 2016 by Lithium S Corporation (an indirect subsidiary of the Company), as lender (for itself and on behalf of a syndicate of lenders, which included (among others) Enirgi Group Corporation (Enirgi) and Regent Mercantile Holdings Limited (Regent)). Enirgi and Regent are each a Non-Arm's Length Party of the Company under TSX-V policies as a result of their shareholdings in the Company and/or cross-directorships.
In connection with the repayment of the portion of the loan owed to Enirgi, an aggregate of 5,181,347 common shares of the Company were issued to Enirgi at a price of $0.965 per share in satisfaction of the repayment of the $5 million principal amount owing to Enirgi pursuant to the terms of the loan.
In addition, the Company will issue approximately 539,669 common shares to an employee of LitheA in satisfaction of the payment of a $500,000 finder's fee payable to such employee following the completion of the acquisition.
As a result of the issuance of common shares of the Company in connection with the completion of the acquisition (prior to the issuance of the finder's fee shares):
- Lim beneficially owns and/or controls (directly and through BMC) in aggregate 26,022,008 common shares of the Company, representing approximately 22.4% of the current outstanding common shares, and
- Enirgi holds an aggregate of 20,588,372 common shares of the Company, representing approximately 17.7% of the current outstanding common shares.
The shares of the Company issued to Lim and BMC are subject to a 4-month hold period until October 30, 2017 and are also subject ot the TSXV's "value escrow" requirements.
LitheA has $16,219,619 of unsecured, subordinated debt owing to BMC (the "Subordinated BMC Debt"). The Subordinated BMC Debt does not bear interest, and will be repaid by LitheA in semi-annual installments calculated on the following basis: 20% of net income, plus 20% of depreciation and amortization, less 20% of capital expenditures, less 20% of net changes in working capital (excluding cash and debt), less certain other specified amounts. In addition, pursuant to a amended and restated secured promissory grid note (the "Note") dated March 14, 2017 LitheA has $2,000,000 outstanding under a loan facility from the Company, which has been primarily used by LitheA to advance due diligence and exploration work on the Pozuelos Property. The Note has become an inter-company debt of LSC as a result of the acquisition of LitheA.
ABOUT LSC LITHIUM CORPORATION:
LSC Lithium has amassed a large portfolio of prospective lithium rich salars. LSC is focused on developing its tenements located in five salars: Pozuelos, Pastos Grandes, Rio Grande, Salinas Grandes and Jama. All LSC tenements are located in the "Lithium Triangle," an area at the intersection of Argentina, Bolivia, and Chile where the world's most abundant lithium brine deposits are found. LSC Lithium has a land package portfolio totaling approximately 300,000 hectares, which represents extensive lithium prospective salar holdings in Argentina.
Qualified Person/Data Verification
The scientific and technical information included in this press release is based upon information prepared and approved by Donald H. Hains, P.Geo. Donald H. Hains is a qualified person, as defined in NI 43-101 and is independent of LSC and Lithea.
