Critical Resources will pay Essential an exclusivity fee of $87,500 cash to acquire Essential’s 51% interest in the Mavis Lake Joint Venture
Critical Resource will acquire all the shares in PCLC from Essential. (Credit: Manuel Cortés Núñez from Pixabay)
Critical Resources Limited, Essential Metals Limited and International Lithium Corporation (ILC) have agreed the key commercial terms under which Essential and ILC will sell their respective interests in the Mavis Lake Lithium Project Joint Venture located in Ontario, Canada, to Critical Resources.
Critical Resources paid $25,000 in total to Essential and ILC for exclusivity to negotiate a binding agreement to acquire 100% of the Mavis Lake Lithium Project.
Critical Resources and Essential have signed a binding term sheet under which Critical Resources has an exclusive option to acquire 100% of the shares in Pioneer Canada Lithium Corporation (“PCLC”), a 100%-owned Canadian subsidiary of Essential and holder of Essential’s 51% interest in the Mavis Lake Lithium Project Joint Venture with ILC. Critical Resources has also signed a binding term sheet with ILC to acquire its 49% interest the Joint Venture with ILC waiving its entitlement to a 1.5% Project royalty.
Under the binding term sheet with Essential, Critical Resources will pay Essential an exclusivity fee of $87,500 cash to acquire Essential’s 51% interest in the Mavis Lake Joint Venture. Critical Resources has until 4 January 2022 to elect to proceed with the acquisition. Critical Resources will use the exclusivity period to conduct due legal and technical diligence and to call a shareholder meeting to seek approval to undertake a capital raising.
Upon electing to proceed, Critical Resource will acquire all the shares in PCLC from Essential and will:
-Pay $750,000 in cash to Essential; and
-Issue 34 million fully paid ordinary listed shares in Critical Resources to Essential. These shares are not subject to an escrow period.
The following contingent milestone payments will be attached to the Project:
-Following the definition of a Mineral Resource Estimate (as defined in the JORC Code 2012) for the Project with a volume of not less than 5Mt containing not less than 50,000t of Li2O using a cut-off grade of not less than 0.4% Li2O, Essential will receive $750,000 in cash; and
-Following the definition of a Mineral Resource Estimate (as defined in the JORC Code 2012) for the Project with a volume of not less than 10Mt containing not less than 100,000t of Li2O using a cut-off grade of not less than 0.4% Li2O, Essential will receive a further $750,000 in cash.
The binding term sheet contains the usual warranties and conditions precedent for this type of transaction including that Critical Resources raises no less than A$3.5 million via an equity capital raising (gross proceeds).
Essential Metals Managing Director, Tim Spencer, said: “The strong interest in lithium has allowed Essential and ILC to monetize an early-stage, non-core asset on favourable terms. Retaining upside exposure via a shareholding in Critical Resources means we will benefit from any success the Critical Resources team has in advancing Mavis Lake.
“We will continue to focus our efforts on the Company’s first-class West Australian lithium and gold projects, with the rapid advancement of the Pioneer Dome Lithium Project in WA’s Eastern Goldfields being our highest priority.”
Source: Company Press Release