ASX Release

Lepidico Limited (ASX: LPD) (“Lepidico”) and Desert Lion Energy Inc. (TSXV: DLI) (“Desert Lion”) today announced they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) whereby Lepidico will acquire all of the outstanding common shares of Desert Lion for 5.4 Lepidico ordinary shares for every 1 Desert Lion share (The “Transaction”). The Transaction will create a vertically integrated lithium development company from mine to chemical conversion plant by combining Lepidico’s leading proprietary lithium processing technologies with Desert Lion’s lepidolite Mineral Resources and extensive exploration package.

 

The agreed exchange ratio represents a premium of either 38% based on the closing price of Lepidico and Desert Lion shares on 3 May 2019 or 39% based on the 10 trading day volume weighted average price of the shares. Directors and officers of Desert Lion representing 17% of Desert Lion’s shares on issue have entered into voting and support agreements to vote in favour of the Transaction.

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Transaction Highlights

• The Transaction will combine two companies with highly complementary assets to create an integrated lithium business which has:

  • Lepidico’s innovative L-Max®, LOH-MaxTM and S-MaxTM proprietary process technologies and ore offtake arrangement with Mota Ceramic Solutions (“MCS”) from the operational Alvarrões lepidolite mine in Portugal. Mineral Resources – Indicated 2.60Mt @ 0.87% Li2O & Inferred 3.27Mt @ 0.87% Li2O;

  • Desert Lion’s lepidolite deposits in Namibia and partially developed lepidolite concentrator. Mineral Resources – Indicated 3.0Mt @ 0.63% Li2O & Inferred 5.8Mt @ 0.53% Li2O;

  • Lepidico’s pilot plant with L-Max® and S-MaxTM capability, which is in the commissioning phase, and the Phase 1 Plant Project, at the advanced stages of feasibility study which contemplates output capacity of 5,000tpa lithium hydroxide;

  • Battery grade lithium carbonate of 99.8% purity produced from Desert Lion lepidolite mineralisation in L-Max® amenability trial; and

  • Desert Lion’s non-binding offtake agreement for lithium hydroxide with chemicals and materials multination corporation BASF SE.

• Lepidico will also undertake a 1 for 9 pro-rata renounceable Entitlements Offer at an issue price of $0.029 to raise up to $10.8 million for business integration, new development and growth opportunities, with one (1) free attaching option, for every two (2) new shares issued under the offer. The Entitlements Offer is scheduled to close on 29 May 2019.

• The merged company will be called Lepidico Ltd and will continue to be headquartered in Perth, Australia. No changes to Lepidico's Board of Directors are planned.

 

Advisers

Bacchus Capital Advisers Ltd is acting as Lepidico's exclusive financial adviser, and Stikeman Elliott LLP and Steinepreis Paganin are acting as Lepidico's legal advisers. INFOR Financial Inc. is acting as Desert Lion's exclusive financial adviser, and Fasken Martineau DuMoulin LLP is acting as Desert Lion's legal adviser.