Lithium Power International Ltd is set to divest its Australian offshoot, Western Lithium Ltd (WLI), to Albemarle Lithium Pty Ltd, a subsidiary of Albemarle Corporation.
The arrangement, valued at A$30 million, marks an all cash-for-shares agreement, with Albemarle slated to acquire 100% of WLI's shares and the tenements held by the company.
LPI originally intended to spin WLI out into a separate ASX-listed entity, but given the current market conditions, the company believes this deal offers immediate realisation of value without the associated risk of an Initial Public Offering (IPO).
Solid cash injection
“This agreement with Albemarle provides LPI with immediate value for our Western Lithium subsidiary company,” Lithium Power International CEO Cristobal Garcia-Huidobro said.
“Despite the significant progress we had made towards an IPO of Western Lithium in the past months, this asset realisation will provide a significant uplift to the pre-money valuation of our Western Australia asset portfolio.
“It will add significant cash to the company’s balance sheet and is non-dilutionary to LPI shareholders, as the financing process of our flagship Maricunga project in Chile continues moving forward."
Out of the total agreement price, A$29 million will be paid upfront upon transaction completion.
The remaining A$1 million is contingent on specific tenement applications being approved within 18 months of the deal's close. The arrangement carries no conditions precedent.
For LPI, this transaction means an immediate cash injection for its flagship Maricunga Lithium Brine Project in Chile.
With a healthy cash balance projected, the company is expected to be in a robust position as it proceeds to secure finance and offtake agreements with international institutions.