Core Lithium (ASX:CXO) has entered into separate and discrete agreements with Lithium Australia (ASX:LIT), to purchase 7.6 million shares in Charger Metals (ASX:CHR), representing 9.8% of the issued capital.
Under the agreement, which must be completed before 20 September 2024, the purchase price payable by Core is the issue of 6.08 million shares in the company. As a result, Lithium Australia will hold 0.3% of shares in Core Lithium.
In a separate agreement, Core Lithium, which has a market capitalisation of $177.36 million, has also agreed to purchase Lithium Australia’s 30% interest in the Bynoe Project, subject to certain conditions.
The Bynoe Project, in which Charger Metals holds a 70% interest, is an exploration licence in the Northern Territory surrounded by tenements that are a part of Core Lithium’s Finniss Project.
Core Lithium will pay $500,000 to purchase the 30% interest in the project.
Under the terms of the joint venture, Charger Metals has a pre-emptive right to acquire the 30% interest for the same price, for a 60-day period. The acquisition by Core Lithium will only proceed if Charger declines to exercise this right during this time.
Core Lithium says the 30% interest is free carried and requires no expenditure by Lithium Australia until Charger completes a Definitive Feasibility Study.
Lithium Australia CEO Simon Linge says the divesting of these non-core assets in order to fund the company’s ongoing activities “has been our strategy for a number of years and we are pleased to realise value for our Charger shares and project assets.”
“The exchange of the Charger Metals shares into Core Lithium shares provides us with improved liquidity in our investment holdings, which can be freely sold,” he continues.
“In addition, our agreement with Core also allows the company to retain any upside on a potential Charger transaction in the near future.”
Core Lithium has also granted Lithium Australia a call option to re-acquire the Charger shares should a prescribed control event occur within nine months, with an offer ration that exceeds 0.8 Core shares for each Charger share.
The agreement to issue the Core shares as consideration for any cancellation of the option is capped at 15 million Core shares.
Core Lithium notes these agreements follow the confidential non-binding indicative offer made for the potential acquisition of Charger by way of a scheme of arrangement.
The offer was subject to due diligence, among other things, and was not accepted by Charger’s board.
Core Lithium says it remains open to discussing the progression of the offer with Charger, should the company’s board be willing to do so.
Charger Metals is an Australian battery and precious metals explorer. The company has projects in Western Australia and the Northern Territory, considered prospective for nickel, copper, cobalt, lithium, gold, and platinum group elements.
Core Lithium is an Australian hard-rock lithium company that operates in the Northern Territory.
Write to Aaliyah Rogan at Mining.com.au
Images: Core Lithium
