#Canada #Vancouver #Joint Venture #Lithium South #Hombre Muerto

Strategic Partnership: Lithium South's Ambitious Step Forward

Lithium South Development Corporation, a prominent player in the lithium industry, has proudly announced a significant development in its business operations. On January 10, 2025, the company signed a Letter of Intent (LOI) for a cooperative venture concerning the Hombre Muerto North Lithium Project (HMN Li Project) situated in Argentina's Salta Province. This partnership aims to bolster the project's funding and development, marking a substantial step in the competitive landscape of lithium production, essential for the ever-growing electric vehicle market.

The Significance of the Hombre Muerto North Lithium Project

Situated within the famed Lithium Triangle, the HMN Li Project boasts a rich history of lithium extraction. With notable lithium production from nearby sites such as Arcadium Lithium, which has been operational for over 25 years, this strategic location is pivotal for Lithium South's future endeavors. The demand for lithium has surged, primarily driven by advances in battery technology; thus, this project holds promise for substantial productivity.

A Confidential Party for Development

The LOI was established between Lithium South and a non-disclosed European corporation, which brings strong financial backing to the table. This confidentiality is maintained until the Definitive Agreement (DA) is finalized. The collaboration will focus on the HMN Li Project, allowing for a plethora of possibilities, including financing and joint development activities.

Financial Commitments

The terms agreed upon illustrate a robust financial structure:
1. The partnering entity has committed to securing a capital loan up to $10 million, aimed at completing a Definitive Feasibility Study (DFS).
2. Furthermore, project funding will be sought for 80% of the capital expenditures (CAPEX) as determined in the DFS.

The proposal also includes an 'earn-in' structure where the partner will gain a 10% stake in the project upon securing a loan confirmation for the DFS, with an additional 30% attainable thereafter based on further funding agreements.

Strategic Rights and Shares

An intriguing aspect of the LOI is the arrangement involving special warrants. Upon finishing the Definitive Agreement, the company will issue warrants to the partner at a cost of $1 million, translating to a 10% share of the organization's issued shares post-conversion. This deal accentuates the mutual interest in furthering the project's success while ensuring funding channels are reliably established. Moreover, the partner will obtain rights to 80% of the lithium production from the HMN Li Project, alongside a 4% commission on gross sales.

Conditions Precedent for the Definitive Agreement

The progression towards establishing a Definitive Agreement is contingent upon several key factors, including:

• - Renegotiation of existing agreements related to offtake.
• - The completion of due diligence by the partner within a 60-day timeframe, which has already commenced.
• - Approval from respective governing boards and regulatory bodies.
• - No significant adverse changes in either party's business conditions.

During this evaluation phase, Lithium South has committed to refraining from engaging with other potential partners, allowing for an unencumbered focus on solidifying this venture.

Commitment to Development

Lithium South is determined to advance the HMN Li Project, which has a mineral resource estimate compliant with NI 43-101 and a promising assessment for developing a substantial lithium carbonate output. Existing exploration efforts have highlighted a 1.58 million tonne lithium carbonate equivalent resource across three significant claim blocks.

As the company continues its work, it is positioned to capitalize on the rising demand for lithium, fueled by the global push for sustainable energy solutions. With this strategic partnership, the future looks promising for both Lithium South and its European counterpart.

Conclusion

In conclusion, Lithium South's recent LOI for a joint venture signals an exciting chapter in its developmental narrative. The company's focus on expanding its operational capabilities aligns with the global trend towards renewable energy and electric vehicles. As the energy landscape continues to evolve, Lithium South is poised to play a pivotal role in the lithium production sector, making this partnership instrumental not just for the company but also for the energy economy as a whole.