Cadence ‘balances risk and reward’ in sale of lithium interests

Cadence Minerals plc is in line to receive A$6.63 million (£3.7m) from the sale of its holdings in two lithium companies in Northern Australia.

TERMS

The early investment strategy and development company owns 31.5% of Lithium Technologies (LT) and Lithium Supplies (LS).

LT and LS hold two prospective exploration licences and one exploration application in Australia and seven exploration licence applications in Argentina.

Cadence and all shareholders of LT and LS reached a conditional agreement to sell 100% of the equity of both LT and LS for up to A$21.05m (£11.82m).

The public unlisted Australian buyer will spend a minimum of A$4m over three years on exploration of the Litchfield lithium prospect.

Payment to LT and LS shareholders will be via a mixture of cash and shares.

MILESTONE PAYMENTS

Cadence chief executive Kiran Morzaria said that the transaction was an “excellent balance of risk and reward”.

“Firstly it provides an initial consideration that more than covers our book investment.

“Secondly, by partly paying the consideration in shares in the buyer and cash payment on milestones we are exposed the the exploration upside.

“Lastly, given the commitment of at least A$4 million to explore the primary assets, this mitigates dilution to Cadence shareholders.”

Cadence added that the deal would also allow it to focus on delivering additional value at its flagship Amapa iron ore project in Brazil.