Lithium Universe Ltd (ASX:LU7, OTC:ESMAF) has launched a share purchase plan (SPP) targeting A$3 million to enhance its position in the lithium market in North America.
This plan offers existing shareholders an opportunity to invest further in the company at a discounted rate to support its ambitious Québec Lithium Processing Hub (QLPH) strategy.
The SPP will allow shareholders registered as of March 12, with addresses in Australia or New Zealand, to purchase shares without incurring brokerage fees, at an issue price of A$0.02 per share.
This price reflects a 9.09% discount on the closing price of A$0.022 per share on the record date and the 5-day volume-weighted average price preceding the announcement.
Establishing a hub in Canada
Lithium Universe's QLPH strategy focuses on establishing a lithium concentrator and refinery in Canada.
The initiative aims to fill the critical gap in North America's lithium converting capacity, essential for the burgeoning cathode and battery sector, which sees a demand for 800,000 tonnes per annum (tpa) of lithium chemicals.
Currently, planned capacities in North America fall short, with only 100,000 tpa of lithium chemicals.
The company's efforts to close this gap include the conversion of spodumene for multinational corporations, reducing reliance on Chinese processing, and incorporating run of mine ore from its Canadian assets.
The planned acquisition of an industrial site in Bécancour, Québec, capable of housing three refineries with a combined capacity of 48,000 tpa of lithium carbonate, is a key plank in the company’s strategy.
Funds raised through the SPP will support the advancement of engineering studies and meet working capital needs, crucial for the design and development of a multi-purpose spodumene concentrator and lithium carbonate refinery within Québec's James Bay and Bécancour regions, respectively.
Chair Iggy Tan said: “The company is looking to raise working capital and reward previous Mogul Games shareholders and new shareholders for their continual support by pricing the SPP at the price of the Lithium Universe IPO completed in August 2023 (via a re-compliance listing).
Full steam ahead
“Despite the decline in lithium prices affecting numerous industry players, Lithium Universe is full steam ahead. We view the current short-term dip in lithium prices as an advantageous window to finalise feasibility studies for the QLPH before the onset of the next cycle.
“These moments present tangible opportunities for our organisation and we invite current shareholders to position themselves for the next lithium cycle.
“I look forward to achieving several significant milestones in 2024 for the QLPH strategy. We are well advanced on the key engineering studies which will form the basis for the company moving towards funding, construction and development.”