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Lithium Australia progressing due diligence on acquisition on the Very Small Particle Company

The acquisition would further enhance the company's lithium focused portfolio.
Lithium Australia progressing due diligence on acquisition on the Very Small Particle Company
Lithium Australia is advancing due diligence

Lithium Australia NL (ASX:LIT) is positioning itself to add further to its portfolio of disruptive lithium extraction technologies.

In August the company proposed to acquire the unlisted public company Very Small Particle Company (VSPC), a researcher and developer of some of the world’s most innovative and respected new-era cathode material for Li-ion batteries.

VSPC’s intellectual property facilitates the production of battery cathode material.

Since agreeing the terms of the transaction, Lithium Australia has been undertaking due diligence to support the veracity of the acquisition.

The company said that the investigations have been progressing well, with a very positive outcome to date.

A number of tasks have not been completed in accordance with the original schedule and the due diligence period has been extended a further three weeks whilst, amongst other things, the company awaits the results from cathode testing in Germany.

The proposed acquisition would provide the company with widespread energy metal capability including processing expertise for both fresh and waste ore, and recycling entry points into energy metals and cathode supply for global battery markets.

Plant and testing facility

The proposed acquisition includes a decommissioned pilot plant in Brisbane designed to produce complex metal oxides/phosphates for cathode production.

The plant, which incorporates Australia’s most advanced Li-ion battery-laboratory and testing facility, which can establish the quality, performance and reliability of cells produced using the VSPC technology.

The laboratory includes cathode coating equipment and cell production capacity.

Consideration

Subject to satisfactory due diligence and any required regulatory approvals, LIT and VSPC have agreed under a non-binding term sheet for LIT to purchase up to 100% of all issued capital of VSPC.

There is a minimum acceptance condition of 75% of VSPC share capital, for consideration of:

- A non-refundable cash payment of up to $45,000 depending on the length of the due diligence period; and
- The issue of up to 61,151,326 LIT shares and up to 30,575,663 $0.25 partly paid LIT shares (paid to $0.0001).

Additional funding

Lithium Australia has also received a $1.5 million loan facility with immediate access to $1.2 million from Innovative Technology Funding Pty Ltd, which continues the company's active review of its capital management program.

The funding is via a drawdown facility offset against the 2016/2017 research and development (R&D) rebate and provides access to working capital ahead of the rebate being finalised.

This facility will be extinguished upon receipt of the R&D rebate, which is currently expected within two months.

The drawdown mechanism further strengthens the company's short-term working capital in conjunction with its At-The-Market facility which is currently being used to fund fixed overheads.

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