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RECENT NEWS

STRATEGIC PARTNERS

 

 

In August 2011, Li3 executed a Securities Purchase Agreement with POSCO, Canada Ltd., a wholly owned subsidiary of POSCO (NYSE: PKX).  On August 24th, 2012 Li3 closed on the $10 million second tranche of funding, completing the $18 million dollar investment commitment executed in August 2011.

POSCO Overview:

  • Republic of South Korea multinational global leader, founded in 1968 and based in Seoul
  • The Company has operations in energy, chemicals and materials
  • One of the largest steel manufacturers in the world, amassing over $60 B in annual revenues
  • Invests in numerous global resource development projects, while also pursuing lithium projects globally

In March 2012, Li3 and POSCO executed a Non-Binding Memorandum of Understanding to construct a test facility.

POSCO’s Lithium Extraction Technology

On February 23rd, 2012 POSCO announced that it had developed technology which could potentially change the lithium market. The Company stated it had successfully demonstrated the technology at a pilot plant scale in Korea using resources from various third parties including Li3 Energy. POSCO stated that:

  • Its affiliated research center had developed technology to directly extract lithium from brines, while reducing the lithium processing times from the current average of one year or more down to a month
  • The Research Institute Science and Technology (RIST) unit demonstrated that the technology produced yields of 80% lithium from brines, doubling the industry standard of 40%
  • While usually natural evaporation leaves other elements in impure forms, the new technology allows separate extractions of lithium as well as other high-value added elements such as magnesium, calcium, potassium and boron


In March 2013, POSCO announced that the company successfully completed testing of the company’s proprietary Direct Lithium Extraction Process. The Company addressed current lithium economics and inefficiencies by demonstrating that the technology:

  • Increased lithium yields from 40-50% to 80%
  • Achieved lithium carbonate end product in 8 hours vs. industry average of 12 months
  • Is non-dependent on climatic conditions, self-contained and eliminates use of evaporation ponds
  • Is adaptable, scalable and represents a paradigm shift in commercializing lithium

 

Additional information can be found at www.posco.com

 

MSB


MSB is a Chilean private company which was formed in 2013 to explore and develop the Maricunga Salar. It is controlled by Chilean businessman Martin Borda, who is involved in a wide range of industries including the automotive, aquaculture and food sectors.

On January 27, 2014, the Company entered into a sale agreement with MSB, pursuant to which MSB acquired from the Company eleven of its sixty shares of Minera Li (the "Share Purchase") for a cash payment of $1,500,000. In connection with the Share Purchase, Minera Li held a shareholder's meeting, pursuant to which Minera Li issued forty additional shares to MSB in exchange for a cash payment of $5,500,000 (together with the Share Purchase, the "MSB Transaction"). As a result of the MSB Transaction, MSB became the majority shareholder of Minera Li holding 51% ownership, with the Company retaining a 49% interest.

Concurrent with the execution of the MSB Transaction, the Company and MSB also entered into a Shareholders Agreement regarding their joint ownership of Minera Li (the "Shareholders Agreement"). Under the Shareholders Agreement, MSB agreed to pay $1,000,000 (the "Additional Payment") to the Company upon the earlier of (i) its completion of certain project milestones relating to the permitting and development of the Maricunga Project, and (ii) January 27, 2016.

MSB agreed to finance the Company's exploration and development expenses until the Maricunga Project reaches full permitting and is ready for construction, by providing loans due 24 months from receipt at an interest rate of 12% per annum and secured by the Company's ownership interest in Minera Li. Specific limits for these loans were to be negotiated in good faith between MSB and the Company. As of June 30, 2016, the Company has not received any such loans.

MSB also provided the Company with a credit facility of $1,800,000 for working capital, pursuant to which $1,220,000 were provided to the Company by MSB. The loans were due for repayment 18 months from each drawdown date at an interest rate of 8.5%, and the Company pledged 13 of its shares in Minera Li as security for the loans.

On January 19, 2016, the Company entered into an additional agreement with MSB whereby the Company and MSB agreed to offset the $1,000,000 Additional Payment MSB previously agreed to provide to the Company against $1,000,000 of the Company's notes payable to MSB and $134,901 of accrued interest owed to MSB was rolled into the Company's existing note payable. In addition, MSB loaned an additional $100,000 to the Company and MSB waived the 13 shares in Minera Li which were pledged by the Company to MSB as security for its notes payable. The resulting $454,901 loan payable is due on January 18, 2018, bears interest at 8.5% per annum, and is secured by 5 of the Company's shares in Minera Li.

In accordance with the Shareholders Agreement, the board of directors of Minera Li consists of three representatives from MSB and two representatives from Li3, including Li3's Chairman and CEO. Although financial control of Minera Li lies with MSB, MSB is reliant on Li3's expertise in the mining and lithium sectors. As such, the technical team previously responsible for the Maricunga Project remains deeply involved in its current development plans and continues to be supervised by Li3's management and board participants. On July 20, 2016, MSB entered into a binding and exclusive agreement with Lithium Power International Limited ("LPI"), an Australian company, regarding a joint venture to explore and develop the Maricunga Project in accordance with a term sheet dated July 14, 2016. On August 30, 2016, the Company entered into an agreement with MSB, pursuant to which, the Company and MSB, as the current shareholders of Minera Li, unanimously agreed to approve the transactions contemplated by the term sheet (the "Transaction").

As part of the Transaction, Mineral Li and MSB will contribute their Maricunga lithium brine assets to a new joint venture (the "Maricunga JV") and LPI will contribute $27.5 million in cash to the Maricunga JV to cover exploration and development costs for the next 2.5 years until the completion of a definitive feasibility study in late 2018. Following the completion of the Transaction, the Company will own a direct 17.67% equity interest of the Maricunga JV, with LPI and MSB owning 50.0% and 32.34%, respectively. The Company will be entitled to appoint one director of the Maricunga JV (so long as it holds at least 10% of the equity interests of the joint venture), with LPI and MSB holding three and two director seats, respectively.

On September 1, 2016, LPI announced that it had satisfactorily completed the legal and technical due diligence regarding the Maricunga JV.