Pan American Lithium Corp. Announces Private Placement With POSCAN
August 25 2011 - 1:54PM
Pan American Lithium Corp. (TSX-V:PL) (OTCBB:PALTF)
(OTCQB:PALTF) (the "Company" or "Pan American"), a lithium
exploration company with 11 lithium/potash brine projects in Chile,
is pleased to announce that the Company has entered into a
subscription agreement for a private placement with POSCO Canada
Ltd. ("POSCAN"), a Canadian corporation 100% owned by POSCO
(NYSE:PKX), one of the largest steel manufacturers in the world,
with headquarters in the Republic of South Korea. On closing,
the Company will issue 10,522,090 common shares to POSCAN at the
price of CDN$0.136 per common share, resulting in gross proceeds to
the Company of CDN$1,431,004. The common shares issued by the
Company in connection with the financing are subject to a hold
period expiring four months from the date of
closing. Following the closing of the financing, POSCAN will
hold 19.87% of the issued and outstanding common shares of Pan
American. Closing of this transaction is set to occur on or
before September 16, 2011, and is subject to customary closing
conditions. Ladenburg Thalmann & Co. Inc., a subsidiary of
Ladenburg Thalmann Financial Services Inc. (NYSE Amex: LTS), acted
as financial advisor to the Company.
The Company anticipates that the proceeds from the financing
will be used primarily as working capital for Pan American
interests in its lithium/potash brine properties, as well as
general working capital for Company.
On closing, the Company has agreed to grant POSCAN a right until
expiry on December 31, 2012 to construct a production or R&D
facility, at POSCAN's expense, for the extraction of lithium or
other minerals from brines at one of the Company's Chilean brine
properties, on terms to be mutually agreed upon. If POSCAN elects
not to exercise the right by this date, POSCAN's pre-approval
rights on certain corporate actions discussed below will terminate
and the Company will not be required to nominate a POSCAN nominee
to the Company's board at future annual general meetings.
In connection with the closing, Pan American has agreed to
increase the size of its board to four directors and, subject to
approval from the TSX Venture Exchange, appoint a director
nominated by POSCAN/POSCO to the vacant seat. The Company has
agreed to nominate the POSCO nominee to its board at annual general
meetings so long as POSCO owns no less than 10% of the Company's
issued and outstanding common shares and so long as POSCO exercises
its right to build the pilot plant on or prior to December 31,
2012, as discussed above. During the period in which the
nominee is appointed to the Company's board, the Company will not
be permitted to carry out certain corporate actions without the
prior approval of the nominee, including certain corporate
reorganizations, a sale of all assets, a change of business, the
alteration of the Company's constating documents (with the
exception of the creation of a class or series of preferred shares)
and the Company incurring debt that exceeds CDN$1 million (except
non-recourse project financing, the issuance of convertible debt or
preferred securities, or debt owed to trade creditors or to
officers, directors and consultants for unpaid salaries and
expenses).
On closing, the Company has also agreed to grant POSCAN a
pre-emptive right to purchase a pro rata share of any new
securities offered by the Company for such period of time that
POSCAN owns no less than 10% of the Company's issued and
outstanding common shares. Under such circumstances, POSCAN is
entitled to participate in such new offerings to maintain its
percentage of common shares. Certain issuances are exempted
from the pre-emptive right such as securities issued to insiders,
consultants and employees for compensation purposes, the issuance
of common shares on the exercise of securities outstanding on the
closing date of the financing, the issuance of securities for the
settlement of certain debts, the issuance of securities to brokers,
agents and finders in connection with any financings and the
issuances of securities in connection with business
combinations.
Andrew Brodkey, Pan American's President, commented as follows:
"Pan American is pleased to achieve several of its key corporate
objectives by securing a sizable investment from POSCAN and to have
a large, multinational company as a strategic partner for our
lithium business. We also importantly negotiated to limit POSCAN's
investment in Pan American to less than 20%, thereby avoiding a
'control position' in the Company. We welcome the financial
strength and substantial technical expertise of a strategic partner
like POSCAN/POSCO which will likely prove invaluable to one or more
of our Chilean or other lithium projects in the near future."
About Pan American:
In total, the Company has rights in eleven lithium and
potash-bearing brine projects in Chile's Atacama Region III
covering cumulatively more than 20,000 hectares. The Company also
has an option to acquire an indirect interest in the Cierro Prieto
geothermal lithium brine project in Baja California Norte, Mexico.
The Laguna Verde surface brine lake project is the most advanced of
the Company's portfolio of 11 lithium and potassium bearing brines
projects in Chile.
About POSCO
POSCO is a publicly traded Korean conglomerate, first
established in 1967, with a focus on the production and sale of
steel and steel products, both domestically in Korea and
internationally. POSCO is the fourth largest steel producer in the
world. In 2008, POSCO produced over 33 million tons of crude steel,
had revenues of over CDN28 billion and net profits of over CDN4
billion.
On Behalf of the Board, |
|
PAN AMERICAN LITHIUM CORP. |
/s/ Andrew Brodkey |
Andrew A. Brodkey |
President and CEO |
This press release contains projections and forward-looking
information that involve various risks and uncertainties regarding
future events. Such forward-looking information can include without
limitation statements based on current expectations involving a
number of risks and uncertainties and are not guarantees of future
performance of the Company such as the statement that: (i) the
closing of the private placement will occur within the next three
weeks; (ii) the Company anticipates that proceeds from the
financing will be used primarily as working capital; and (iii) that
the investment by POSCAN will likely prove invaluable to one or
more of the Company's projects in the near future. There are
numerous risks and uncertainties that could cause actual results
and the Company's plans and objectives to differ materially from
those expressed in the forward-looking information, including: (i)
the inability of the Company to close the private placement for any
reason including the securities of the company being cease traded,
the Company being unable to obtain final approval from the TSX
Venture Exchange, the representations and warranties in the
subscription agreement not being true as of the closing date, and
POSCAN not delivering the purchase price for any reason; (ii)
inability of the Company to complete its business plan; (iii) a
decrease in demand for and price of lithium or potassium; (iv)
general uncertainties with respect to mineral exploration in
general; (v) inability to raise future financing when
required. Actual results and future events could differ
materially from those anticipated in such information. These and
all subsequent written and oral forward-looking information are
based on estimates and opinions of management on the dates they are
made and are expressly qualified in their entirety by this notice.
Except as required by law, the Company does not intend to update
these forward-looking statements.
Neither TSX Venture Exchange 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.
CONTACT: Jodi Henderson
Corporate Secretary
Tel: (520) 989-0032
jhenderson@kriyah.com
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