Junior explorer Power Minerals (ASX:PNN) on Tuesday unveiled its plans to purchase more than 250,000 hectares of lithium tenure in Argentina while simultaneously divesting its Santa Ines Copper-Gold project for $1.5 million.
The company has inked a binding term sheet with Canada-based Ultra Lithium (TSXV:ULT) to snap up Ultra’s Argentinian lithium subsidiaries in an all-scrip deal.
Under the deal, Power Minerals will issue to Ultra Lithium 50 million PNN shares in return for full ownership of Ultra Argentina SARL and Ultra Minerals SA, which together own the 7,568-hectare Laguna Verde Lithium Brine Project and more than 250,000 hectares of ‘prospective’ properties in the Catamarca Province of northern Argentina.
Power will issue the first 25 million shares once the deal receives relevant regulatory and shareholder approvals, followed by 25 million performance rights subject to the definition of a mineral resource estimate of 2 million tonnes at greater than or equal to 350 parts per million (ppm) lithium carbonate equivalent (LCE) at the new properties within six months.
The resource will be based on drilling already completed by Ultra Lithium over the past several months, and the second tranche of shares will also be subject to regulatory and shareholder approvals.
As part of the purchase arrangement, Power Minerals will provide a convertible loan of $1.13 million to help facilitate the transaction. The amount utilised under this loan can be deducted from the number of shares to be issued under the deal at a presumed value of $0.35 per PNN share.
Speaking on the deal, Power Minerals Managing Director Mena Habib says the purchase allows the company to ‘extensively expand’ its footprint in Argentina, the ‘world’s best lithium address’.
“This strategic acquisition comes at an opportune time as interest and demand in Argentinian lithium brine continues to increase.
“This strategic acquisition comes at an opportune time as interest and demand in Argentinian lithium brine continues to increase”
We aim to take advantage of this opportunity, in parallel with our core focus on the development of our Salta Lithium project, with the delineation of a JORC Mineral Resource Estimate for the Laguna Verde Project in the second half of 2023, using results from recently completed drilling by Ultra Lithium at the project.
This will complement the ongoing Resource expansion program at Salta.”
Meanwhile, Power is handballing its Santa Ines Copper-Gold Project, also in Argentina, to Chinese investor Fuyang Mingjin New Energy Development Co for $1.5 million in cash.
The sale follows a $2.6 million investment in Power Minerals by Fuyang Mingjin in early May.
Commenting on the term sheet with Fuyang Mingjin, Mr Habib says: “We are delighted to further enhance our relationship with Mingjin with the sale of our Santa Ines Project, following its recent strategic investment in Power.
“We plan to use the combined project sale and investment proceeds of $4.1 million to continue the accelerated development of our Argentinian lithium assets”
We plan to use the combined project sale and investment proceeds of $4.1 million to continue the accelerated development of our Argentinian lithium assets.”
Fuyang Mingjin has already completed its due diligence process under the terms of the sales deal.
Shares in Power Minerals have spiked 34.94% to $0.56 as of 2:26pm AEST on 16 May.
ASX-listed Power Minerals is a lithium exploration and development company primarily focused on its core Salta Lithium Brine Project in Argentina’s ‘lithium triangle’.
Alongside its lithium assets, Power also owns a portfolio of other assets focused on ‘demand-driven’ commodities, such as the Eyre Peninsula Kaolin Project and the Musgrave Nickel-Copper-Cobalt and Platinum Group Element (PGE) Project in South Australia.
Images: Power Metals Ltd
