Highlights:
- Offtake agreement, as amended, signed with Chinese lepidolite
converter for purchase and sale of Phase 1 lithium concentrate
production from stockpiled material
- Prepayment of US$4.5 million
received against delivery of Phase 1 lithium concentrate
- Management estimates that there are approximately 700,000 -
750,000 tonnes of stockpiled material located on the Property that
will produce approximately 150,000 - 160,000 tonnes of lithium
concentrate for sale over the next 12 to 18 months
- First 30,000 tonne shipment of lithium concentrate expected to
be delivered in April 2018
- Construction of the Phase 1 floatation plant capable of
processing approximately 350,000 – 400,000 tonnes per year of feed
is underway, with commissioning due to begin in early Q3 2018
TORONTO, March 6, 2018 /CNW/ - Desert Lion Energy Inc.
(TSXV: DLI) ("Desert Lion Energy" or the "Company") is pleased to
announce that it has entered into a binding offtake agreement, as
amended (the "Agreement") with Chinese lepidolite converter Jiangxi
Jinhui Lithium Co. Limited ("Jinhui" or the "Buyer"), whereby the
Company has agreed to sell lithium concentrate from Phase 1
production of stockpiled material located on the Company's Rubicon
and Helikon properties (together, the "Property"), exclusively to
Jinhui. Jinhui, based in Yinchuan, China, is a chemical converter that produces
lithium carbonate and lithium hydroxide.
Under the terms of the Agreement, Jinhui has agreed to purchase
all lithium concentrate produced from the stockpiled material that
contains not less than 2.0% lithium oxide (Li2O) and up to a
maximum of 120,000 tonnes of lithium concentrate containing not
less than 1.7% Li2O. Management estimates that there are
approximately 700,000 – 750,000 tonnes of stockpiled material
located on the Property that will produce approximately 150,000 –
160,000 tonnes of lithium concentrate for sale to Jinhui under the
Agreement over the next 12 to 18 months. Payment by Jinhui
for each shipment of lithium concentrate, each in an approximate
amount of 30,000 tonnes, shall be collaterized by the delivery by
Jinhui to Desert Lion Energy of irrevocable and unconditional
letters of credit drawable on a major international bank.
On execution of the Agreement, Jinhui made a deposit of
US$4.5 million against future
delivery of lithium concentrate, which depletes by an adjustment of
the purchase price using a depletion factor of US$40.00 per tonne. The purchase price for
lithium concentrate is determined as of the first day of each
month, for that month, calculated as a percentage of the previous
30-day moving average price of 99.5% lithium carbonate as published
by Asian Metals (the "Benchmark"). The percentage of the
Benchmark is determined by the average lithium oxide and tantalum
content of the lithium concentrate.
Where the Company has not delivered the first shipment of
Material to the Port of Walvis Bay (the "FOB Port") on or before
April 16, 2018 (the "Deadline Date"),
the Deposit shall become due and owing, together with interest
accruing thereon at the rate of 10% per annum until repaid in full.
Where Desert Lion Energy delivers the first shipment of Material to
the FOB Port on or before the Deadline Date, Jinhui shall have a
period of 60 days to elect to subscribe for 15% of the common
shares of the Company for $13
million. In consideration for the subscription, the Company
will enter into a five-year offtake agreement with Jinhui for Phase
2 lithium concentrate production produced by Desert Lion Energy
from in-situ ore.
To support the sale of the Phase 1 lithium concentrates, Desert
Lion Energy has installed and commissioned a sorting plant; in
addition, the construction of the Phase 1 floatation plant is
currently underway, with commissioning due to begin in early Q3
2018. Upon completion, the Phase 1 floatation plant will be capable
of processing approximately 350,000 – 400,000 tonnes per year of
feed.
"This offtake agreement and commencement of lithium concentrate
production represents a significant milestone for the Company and
positions Desert Lion as an emerging lithium producer," commented
Tim Johnston, President and Chief
Executive Officer of Desert Lion Energy. "We are in the early
stages of building the next large-scale lithium mine in
Namibia, we are confident that
this relationship provides near-term value for shareholders, while
positioning us for long-term organic growth."
Qualified Persons Consent
Tim Johnston, CPEng, President
and Chief Executive Officer of the Company, and a Qualified Person
as defined by National Instrument 43-101 has reviewed and approved
the scientific and technical information contained in this news
release pertaining to the Property and was responsible for
verifying the data herein.
About Desert Lion Energy
Desert Lion Energy is an emerging lithium development company
focused on building Namibia's
first large-scale lithium mine to be located 30 km south east of
Karibib and approximately 210 km from the nation's capital of
Windhoek. The Company's Rubicon
and Helikon mines is located within a 301 km2 prospective land
package, with known lithium bearing pegmatitic mineralization and
the Company is currently in Phase 1 of its production plan,
producing and exporting lithium concentrate from stockpiled
material. The project site is accessible year-round by road and has
access to power, water, rail, port, airport and communication
infrastructure. Desert Lion Energy is listed on the TSX Venture
Exchange under the ticker "DLI".
Cautionary Note Regarding Forward-Looking Statements
This news release contains "forward-looking information"
within the meaning of applicable securities laws. Generally, any
statements that are not historical facts may contain
forward-looking information, and forward-looking information can be
identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget"
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or indicates that certain actions, events or results
"may", "could", "would", "might" or "will be" taken, "occur" or "be
achieved." Forward-looking information includes, but is not limited
to: statements and expectations regarding the initial targeted
tonnage for the stockpiled material at the Property and lithium
carbonate production therefrom; expected timing for the first
shipment of Material to the FOB Port; the Company's planned work
program for the Property and its exploration and development
schedule and timetable; and the timing for the construction and
commissioning of the Company's Phase 1 floatation
plant.
Forward-looking information is based on certain factors and
assumptions management believes to be reasonable at the time
such statements are made, including but not limited to, continued
exploration activities, lithium and other metal prices, the
estimation of initial and sustaining capital requirements, the
estimation of labour and production costs, the estimation of
mineral reserves and resources, assumptions with respect to
currency fluctuations, the timing and amount of future exploration
and development expenditures, receipt of required regulatory
approvals, the availability of necessary financing for the
Property, permitting.
The forward-looking information involves a number known and
unknown risks, including but not limited to: risks related to
changes in lithium prices; the lack of historical operations;
general global markets and economic conditions; risks associated
with exploration, development and operations of mineral deposits;
and the estimation of initial targeted tonnage and production from
Phase 1 operations for the Property. The foregoing list of factors
is not exhaustive. Please see the Company's joint management
information circular dated January 17,
2018 for a more detailed description of the risk
factors.
Although the Company has attempted to identify important
factors that cause results not to be as anticipated, estimated or
intended, there can be no assurance that such forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
information. Accordingly, readers should not place undue reliance
on forward-looking information. Forward-looking information is made
as of the date hereof and the Company does not undertake to update
or revise any forward-looking information this is included herein,
except in accordance with applicable securities laws.
Cautionary Note Regarding Potential Quantity of Stockpiled
Material
The potential quantity of stockpiled material located on the
Property as disclosed herein is an estimate only and is conceptual
in nature; there has been insufficient exploration to define a
mineral resource and it is uncertain if further work will result in
this estimate being delineated as a mineral resource. Estimates
provided are based on initial prospecting work completed by the
Company.
SOURCE Desert Lion Energy