Lithium Australia Ltd (ASX:LIT, OTC:LMMFF) has signed an agreement with Core Lithium Ltd (ASX:CXO) to sell its remaining 7.6 million shares in Charger Metals NL (ASX:CHR) and its 30% interest in the Bynoe Lithium Project for total value of approximately A$1.041 million.
This continues LIT’s strategy of realising value for non-core assets to fund ongoing activities aimed at leading and enabling the global transition to sustainable lithium production.
Its revenue-generating recycling business and lithium extraction technologies are well-placed to capitalise on growing global lithium-ion battery demand and provides diversification benefits to global supply chains.
Shares in Core Lithium
Lithium Australia will receive 0.8 Core share for every 1 Charger share, which equates to receiving ~6.1 million Core shares for the remaining 7.6 million Charger Metals shares held.
This represents a consideration of A$541,000 (initial valuation), based on CXO’s 5-day volume weighted average trading price (VWAP) as at September 6, 2024.
Bynoe Lithium Project stake
Separate to the Charger Metals share transaction, Lithium Australia has sold the remaining 30% interest in the Bynoe Lithium Project for a A$500,000 cash consideration to Core Lithium, subject to Charger Metals’ pre-emptive rights over the interest.
If the pre-emptive rights are not exercised, or if the pre-emption period expires, this transaction will be settled with a A$500k cash payment to Lithium Australia.
“Improved liquidity”
Lithium Australia CEO and managing director Simon Linge said: “Divesting of non-core assets to fund our ongoing activities has been our strategy for a number of years and we are pleased to realise value for our Charger shares and project assets.
"The exchange of the Charger Metals shares into Core Lithium shares provides us with improved liquidity in our investment holdings, which can be freely sold.
"In addition, our agreement with Core also allows the company to retain any upside on a potential Charger transaction in the near future.”
Aligns with strategy
These transactions align with Lithium Australia’s strategic focus on its existing operations and provides balance sheet flexibility for key growth initiatives.
In regard to the sale of the Charger Metals stake, there is no escrow period for the CXO shares to be received by Lithium Australia, with the shares being freely tradable immediately upon receival.
This transaction includes a 'Control Event' clause, which allows LIT to capture any upside from a potential qualifying takeover event for Charger Metals in the next nine months.
If Charger is acquired within this period, LIT retains the option to gain the difference between the initial ratio and the control valuation by buying back the 7.6 million Charger Metals shares from Core Lithium at the initial ratio (based on the 5-day VWAP of CXO shares at that time) and subsequently selling these shares into the successful transaction, or in some circumstances, LIT may receive this difference from Core Lithium.