Lithium Power International Ltd (ASX:LPI) will assume full control of the “highly attractive” Maricunga Lithium Brine Project in Chile by way of a three-party all-scrip merger with joint venture partners MSB SpA, which owns 31.31% of the project, and TSXV-listed Bearing Lithium, a 17.14% owner.
The transactions increase current LPI shareholders’ proportionate interest in Maricunga from 51.55% to around 57.9%.
Benefits of consolidation
LPI will consolidate the remaining 48.45% of the project that it does not currently own at a discount of roughly 17.1% compared with LPI’s current look-through value of Maricunga.
The company sees several benefits to securing 100% ownership of the project:
- this will simplify decision-making and provide the optimal structure to oversee the rapid development of Maricunga;
- consolidation will de-risk the funding pathway and enhance LPI’s ability to source capital for the development of the project from a wider range of providers when compared with the existing joint venture ownership structure; and
- consideration will be paid in LPI shares, allowing the shareholders of the JV partners to retain exposure to a project which has a net present value (NPV8) of US$1.4 billion ($2.02 billion).
Unanimous board endorsement
The transactions have been unanimously endorsed by the boards of LPI, Bearing and MSB SpA, with the LPI board – other than Martin Borda, who abstained due to being ultimate controller of MSB SpA – recommending that LPI shareholders vote in favour of the transactions at the upcoming shareholder meeting.
Lithium Power chairman David Hannon said: “We are extremely pleased to have reached an agreement with both MSB SpA and Bearing to consolidate 100% ownership of Maricunga.
Strong economics
“The updated DFS released on January 20, 2022, demonstrates that Maricunga could be one of the lowest-cost producers of lithium carbonate in the world, with the project’s strong economics underpinning a highly attractive asset.
“This transaction is a highly logical step for LPI. By assuming full control of the project, LPI will create a strong platform from which to develop and fund Maricunga.
“We look forward to continuing to deliver long-term value for all LPI shareholders, including MSB SpA and the new Bearing shareholders.”