Li3 Energy, Inc., Announces Subscriptions for US$6.0 Million to Fund Acquisition of and Work Program for Maricunga Project, Including Commitment by Pacific Road Funds
LIMA, Peru, April 4, 2011 /PRNewswire/ -- Li3 Energy, Inc. (OTC.BB: LIEG) ("Li3 Energy" or the "Company") is pleased to announce that it has entered into agreements to raise an aggregate of US$6.0 million to fund its planned acquisition of a controlling interest in, and initial work program for, the Maricunga Project in northern Chile.
Li3 Energy has received subscriptions in a private placement offering (the "Offering") for a total of approximately 10.6 million units of its securities (the "Units") to institutional and accredited investors and non-U.S. persons for gross proceeds of US$2.9 million at an offering price of US$0.27 per Unit. Each Unit consists of (i) one share of common stock of Li3 Energy and a (ii) a three-year warrant to purchase one-half of one share of common stock at an exercise price of US$0.40 per whole share. Gottbetter Capital Markets, LLC, acted as lead placement agent for the Offering. Rodman & Renshaw, LLC, acted as co-placement agent for the Offering. LW Casa de Valores SA also participated in the Offering.
In addition, the Company has received US$1.1 million in cash warrant exercise fees in response to a private solicitation of the holders of its outstanding warrants to purchase the Company's common stock for US$0.15 per share, expiring February 22, 2016, to exercise such warrants immediately in exchange for new warrants with the same expiration date and an exercise price of US$0.50 per share in a number equal to one-half of the number of shares of common stock for which a warrant holder exercises its existing warrants. In total, the Company is issuing approximately 7.5 million new shares of common stock and new US$0.50 warrants to purchase approximately 3.7 million shares of common stock in connection with the warrant exercise solicitation.
Li3 Energy plans to apply the net proceeds of the Offering and the warrant exercises towards the consummation of its proposed acquisition of a 60% interest in the Maricunga Project.
Furthermore, funds managed by Pacific Road Capital Management (the "Pacific Road Funds") have subscribed for Units in the Offering on the same terms, for an aggregate purchase price of US$2.0 million, with the stipulation that the funds they invest be used exclusively to fund the work program to carry out exploration programs and studies required to lead the Maricunga Project to the feasibility study stage. The Pacific Road Funds' subscriptions are conditioned on Li3 Energy's raising the additional funds required to complete the purchase of its prospective interest in the Maricunga Project.
On March 1, 2011, Li3 Energy announced that it had signed a binding agreement with a group of private companies to acquire 60% ownership of the companies, which collectively own the Maricunga Project, for US$6 million in cash and a number of shares of Li3 Energy common stock equal to 30% of the outstanding Li3 Energy stock on a post-transaction basis (the "Acquisition"). In addition, Li3 will be committing to invest a total of up to US$5 million in work programs on exploration and studies to advance Maricunga towards the feasibility study stage. Li3 Energy's obligation to close the Acquisition is subject to its financing of the cash purchase price and other customary conditions. Li3 will issue additional shares upon exercise of any options and warrants outstanding at the time of closing, in proportion to the sellers' percentage ownership as of closing.
The binding agreement was to expire on March 24, 2011, if a closing had not taken place, but it has now been extended until April 26, 2011.
The original agreement under which Li3 Energy acquired its Alfredo property in Chile (the "Alfredo SPA") provided that, within a limited period following Li3 Energy's obtaining certain NI 43-101 resource reports on its iodine nitrate and lithium properties, the Alfredo sellers had the option to purchase between US$2.5 million and US$10 million of Li3 Energy common stock at a price per share equal to the greater of US$0.25 and the 30-day volume-weighted average price ("VWAP") at such time (the "Vendors' Milestone Option"). In connection with the Pacific Road Funds' commitment to invest in the Offering, Li3 has agreed to replace the Vendors' Milestone Option with two options: (i) an option (the "Resource Option"), exercisable within limited periods following Li3 Energy's obtaining NI 43-101 measured, indicated and inferred resource reports on either its iodine nitrate or its lithium properties in Chile, that entitles the Alfredo sellers to purchase up to an aggregate of US$10 million of Li3 Energy common stock at a price per share equal to the greater of US$0.27 and 80% of the 20-day VWAP at such time; and (ii) a second option (the "Feasibility Option"), exercisable within limited periods following Li3 Energy's obtaining NI 43-101 measured and indicated mineral reserve reports on either its iodine nitrate or its lithium properties in Chile, that entitles the Alfredo sellers to purchase an aggregate of up to US$15 million of Li3 Energy common stock (or more, to the extent the Resource Option is then exercisable and the Alfredo sellers prefer the terms of the Feasibility Option) at a price per share equal to the greater of US$0.27 and 80% of the 20-day VWAP at such time.
The original Alfredo SPA provided for payments of an aggregate of an additional US$5.5 million (the "Contingent Consideration") upon the achievement of certain milestones with respect to a mine on the Alfredo property. In connection with the Pacific Road Funds' commitment to invest in the Offering, Li3 Energy has agreed that, to the extent that we acquire another iodine nitrate project in Chile and such property is advanced in priority to the Alfredo Property, we will pay the Alfredo Sellers the Contingent Consideration upon achieving the relevant milestones with respect to any Chilean iodine nitrate property.
Luis Saenz, CEO of Li3 Energy, stated: "We are extremely pleased by the current investor interest as shown by this recent placement. We are especially gratified to note that our current shareholders continue to support the Company as we move forward. We will continue our efforts to raise additional capital to enable us to complete the Maricunga acquisition as soon as practicable. We remain committed to developing the project to its full potential."
About Li3 Energy, Inc.
Li3 Energy, Inc. is an early stage, U.S. public company currently pursuing a business strategy in the lithium mining and energy sector in the Americas, with an initial focus on identifying and acquiring opportunities in Peru, Argentina and Chile and the United States. Li3 Energy aims to acquire a significant portfolio of lithium brine deposits in the Americas for the purpose of development and production in order to meet growing market demand and to support the clean energy and green energy initiatives being implemented globally.
Forward-Looking Statements
All statements other than statements of historical facts included in this news release including, without limitation, statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates," "projects," "potential," "target," "goal," "plans," "objective," "should" or similar expressions or variations on such expressions are forward-looking statements. The Company can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause the Company's actual results to differ materially from the forward-looking statements, including, but not limited to: the Company's ability to successfully receive committed funds and close on the subscription agreements that have been executed in the Offering; the Company's ability to receive final binding agreements from the Pacific Road Funds and to timely satisfy the conditions to the Pacific Road Funds' obligations to purchase Units; the Company's ability to timely close on the Acquisition of interests in the Maricunga Project; the Company's ability to identify appropriate corporate acquisition and/or joint venture opportunities in the lithium mining sector and to establish the technical and managerial infrastructure, and to raise the required capital, to take advantage of, and successfully participate in such opportunities; future economic conditions; political stability; and lithium prices. For further information about certain risks faced by the Company, see "Risk Factors" in Part I, Item 1A of Amendment No. 1 to our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on November 5, 2010.
The Company disclaims any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this news release to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
SOURCE Li3 Energy, Inc.
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