Lithium Energy Shareholders Approve Sale of Solaroz Lithium Brine Project
LEL (LEL) Share Update August 2024 Thursday 8th
Lithium Energy Shareholders Approve Sale of Solaroz Project
Lithium Energy Limited (ASX:LEL) has announced that its shareholders have overwhelmingly approved the sale of the company's interest in the Solaroz Lithium Brine Project for US$63 million.
Instant Summary:
- Shareholders voted ~99% in favor of the sale.
- The sale is to CNGR Netherlands New Energy Technology B.V.
- Total consideration for the sale is US$63 million (~A$97 million).
- A US$1.8 million deposit has already been received.
- Completion is subject to regulatory approvals in China and Argentina.
Sale Agreement Details
At a General Meeting held on 8 August 2024, Lithium Energy Limited's shareholders voted overwhelmingly in favor of selling the company's interest in the Solaroz Lithium Brine Project. Approximately 99% of the votes cast were in support of the sale.
The sale is pursuant to a Share Sale Agreement with CNGR Netherlands New Energy Technology B.V. (CNNET), a subsidiary of CNGR Advanced Material Co. Ltd. (Shenzhen Stock Exchange Code: 300919). Lithium Energy has agreed to sell its 90% interest in Solaroz S.A., the Argentinian company that owns the Solaroz Project, for a total consideration of US$63 million (~A$97 million).
Payment Structure
The payment structure includes a US$1.8 million (~A$2.8 million) deposit, with the remaining US$61.2 million (~A$94.1 million) to be paid as follows:
- US$53.7 million (~A$82.6 million) payable at completion.
- US$3 million (~A$4.6 million) to be held in a joint escrow account for 2 years as security for Lithium Energy's performance under the Sale Agreement.
- US$4.5 million (~A$6.9 million) deferred consideration payable if the Benchmark Lithium Carbonate Price exceeds US$23,000/tonne over any 4-month period in the 12 months following completion.
Conditions and Timetable
Several conditions must be met before the sale can be completed, including regulatory approvals in China and Argentina. CNNET and CNGR have already secured the necessary Chinese overseas direct investment and foreign exchange control regulatory approvals. However, CNNET's registration as a foreign company in Argentina is still pending.
The conditions are required to be satisfied by 25 October 2024, with an option to extend by 60 days if necessary. Lithium Energy will provide updates as material conditions are met.
Future Activities
Pending completion of the sale, Lithium Energy will focus on securing the relevant approvals and advancing the initial public offering (IPO) of Axon Graphite Limited (proposed ASX Code: AXG). The company is also exploring new investment opportunities in the battery mineral projects sector.
The sale of the Solaroz Project is a significant move for Lithium Energy, providing a substantial cash inflow that can be used to fund other projects and investments. This could positively impact the company's stock price as investors react to the increased liquidity and strategic focus on other high-potential ventures.
Investor Reaction:
Analysts have generally reacted positively to the sale, noting that the cash infusion will strengthen Lithium Energy's balance sheet. However, some caution remains regarding the pending regulatory approvals and the company's future activities.
Conclusion:
Investors should keep an eye on the completion of the sale and the subsequent regulatory approvals. The successful sale of the Solaroz Project could provide significant opportunities for Lithium Energy to expand its operations and invest in new projects.