LSC Lithium Acquires LitheA Inc. and its Salar De Pozuelos Tenements in Northern Argentina

 

All dollar amounts are in U.S. dollars unless otherwise indicated.

TORONTO, June 30, 2017 /CNW/ - LSC Lithium Corporation ("LSC" or together with its subsdiaries, the "Company") (TSXV:LSC) is pleased to announce that further to its news release dated March 15, 2017, the Company has completed the acquisition of LitheA Inc. ("LitheA").

LitheA's portfolio adds another 30,000 hectares to LSC's Argentina exploration portfolio, bringing the Company's portfolio to 15 properties totaling approximately 300,000 hectares. LitheA's principal asset is its Salar de Pozuelos tenements (the "Pozuelos Property") located in the Province of Salta, Argentina.The Pozuelos Property covers approximately 99% of the surface area of the Salar and has been subject to extensive exploration by LitheA since 2008. LSC has been funding Lithea during the option period in order to advance the exploration program at the Pozuelos Property prior to acquisition.

Further details of the Pozuelos Property are set out in the Company's Filing Statement dated January 27, 2017, and news releases dated March 15, 2017 and April 10, 2017. A technical report prepared under NI 43-101 on the Pozuelos Property by Donald H. Hains, P. Geo entitled "Technical Rpeort on the Salar de Pozuelos Project, Salta Province, Argentina" with an effective date of December 31, 2016 will be filed by the Company on SEDAR. Mr. Hains is an independent qualified person under NI 43-101.

TERMS OF THE ACQUISITION OF LITHEA

Pursuant to the option agreement dated November 23, 2016, as amended, between, LitheA, BMC Global Limited ("BMC"), its parent company BMC Holdings Limited ("BMC Holdings"), its beneficial shareholderHo Sok Lim ("Lim") and LSC Lithium Inc. ("LSC Lithium"), a wholly owned subsidiary of the Company (the "Option Agreement") the Company has (through its subsidiary) acquired all of the issued and outstanding shares of LitheA for an aggregate purchase price of approximately $44 million.

The aggregate purchase price was paid by the issuance of 31,203,355 LSC common shares and the payment of $12,859,848 in cash. In accordance with the terms of the Option Agreement and Put-Call Agreement, the purchase price was satisfied by:

• $9,947,811 cash payment to BMC;
• $1,466,973 offset of principal and accrued interest on indebtedness owed to the Company by BMC Holdings;
• 5,181,347 common shares of the Company issued to Enirgi Group at a price of $0.965 per share
• 22,909,975 common shares of the Company issued to BMC at a price of $0.964 per share;
• $2,912,037 cash payment to Lim; and
• 3,112,033 common shares of the Company issued to Lim at a price of $0.964 per share.

The consideration paid to Lim was made in exchange for the assignment by Lim to LSC Lithium of a loan in the amount of $5.5 million, bearing interest at a rate of 12% per annum and owing by LitheA.

The cash payment to BMC was directed by BMC towards the repayment and discharge of an outstanding loan in the aggregate principal amount of $14,275,816 (plus all accrued interest thereon) which was advanced to BMC Holdings in November 2016 by Lithium S Corporation (an indirect subsidiary of the Company), as lender (for itself and on behalf of a syndicate of lenders, which included (among others) Enirgi Group Corporation (Enirgi) and Regent Mercantile Holdings Limited (Regent)). Enirgi and Regent are each a Non-Arm's Length Party of the Company under TSX-V policies as a result of their shareholdings in the Company and/or cross-directorships.

In connection with the repayment of the portion of the loan owed to Enirgi, an aggregate of 5,181,347 common shares of the Company were issued to Enirgi at a price of $0.965 per share in satisfaction of the repayment of the $5 million principal amount owing to Enirgi pursuant to the terms of the loan.

In addition, the Company will issue approximately 539,669 common shares to an employee of LitheA in satisfaction of the payment of a $500,000 finder's fee payable to such employee following the completion of the acquisition.

As a result of the issuance of common shares of the Company in connection with the completion of the acquisition (prior to the issuance of the finder's fee shares):

• Lim beneficially owns and/or controls (directly and through BMC) in aggregate 26,022,008 common shares of the Company, representing approximately 22.4% of the current outstanding common shares, and
• Enirgi holds an aggregate of 20,588,372 common shares of the Company, representing approximately 17.7% of the current outstanding common shares.

The shares of the Company issued to Lim and BMC are subject to a 4-month hold period until October 30, 2017 and are also subject ot the TSXV's "value escrow" requirements.

LitheA has $16,219,619 of unsecured, subordinated debt owing to BMC (the "Subordinated BMC Debt").The Subordinated BMC Debt does not bear interest, and will be repaid by LitheA in semi-annual installments calculated on the following basis: 20% of net income, plus 20% of depreciation and amortization, less 20% of capital expenditures, less 20% of net changes in working capital (excluding cash and debt), less certain other specified amounts. In addition, pursuant to a amended and restated secured promissory grid note (the "Note") dated March 14, 2017 LitheA has $2,000,000 outstanding under a loan facility from the Company, which has been primarily used by LitheA to advance due diligence and exploration work on the Pozuelos Property. The Note has become an inter-company debt of LSC as a result of the acquisition of LitheA.

ABOUT LSC LITHIUM CORPORATION:

LSC Lithium has amassed a large portfolio of prospective lithium rich salars. LSC is focused on developing its tenements located in five salars: Pozuelos, Pastos Grandes, Rio Grande, Salinas Grandes and Jama.All LSC tenements are located in the "Lithium Triangle," an area at the intersection of Argentina, Bolivia, and Chile where the world's most abundant lithium brine deposits are found. LSC Lithium has a land package portfolio totaling approximately 300,000 hectares, which represents extensive lithium prospective salar holdings in Argentina.

Qualified Person/Data Verification

The scientific and technical information included in this press release is based upon information prepared and approved by Donald H. Hains, P.Geo. Donald H. Hains is a qualified person, as defined in NI 43-101 and is independent of LSC and Lithea.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or future performance, including statements as to the following: LSC's intentions regarding an exploration program for the Pozuelos Property and the timing and ability to advance the Pozuelos Property to feasibility study level. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on LSC's current belief or assumptions as to the outcome and timing of such future events. Whether actual results and developments will conform with LSC's expectations is subject to a number of risks and uncertainties including factors underlying management's assumptions, such as risks related to exploration and the establishment of resources and reserves on the Pozuelos Property or other LSC properties; the application and future licensing of new technologies; the risks around timing, permitting, funding and construction of a regional processing facility at the Salar del Rinc??n by Enirgi Group and the ability of LSC to fast-track production from its own properties by supplying brine to such a facility; risks relating to proposed acquisitions; volatility in lithium prices and the market for lithium; exchange rate fluctuations; volatility in LSC's share price; the requirement for significant additional funds for development that may not be available; changes in national and local government legislation, including permitting and licensing regimes and taxation policies and the enforcement thereof; regulatory, political or economic developments in Argentina or elsewhere; litigation; title, permit or license disputes related to interests on any of the properties in which the Company holds an interest; excessive cost escalation as well as development, permitting, infrastructure, operating or technical difficulties on any of the Company's properties; risks and hazards associated with the business of development and mining on any of the Company's properties. Actual future results may differ materially. The forward-looking information contained in this release is made as of the date hereof and LSC is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein. For more information see the Company's filing statement on SEDAR at www.sedar.com.

Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The TSX Venture Exchange Inc. has neither approved nor disapproved the contents of this press release.

SOURCELSC Lithium Corporation

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