Lithium Power International begins new demerger process

Lithium Power International (LPI) is set to demerge its Western Australian (WA) hard rock lithium assets.

Lithium Power International Limited (LPI) today announced its intention to demerge its Western Australian hard rock lithium assets. The Demerger will create a dedicated, WA-focused lithium exploration company with the management team and resources to realise the value of the WA assets. The Demerger will enable LPI to focus its resources on developing its Maricunga Lithium Brine Project in Chile.

LPI Chief Executive Officer’s remarks

Lithium Power’s Chief Executive Officer, Cristobal Garcia-Huidobro, said: “LPI believes that there is a compelling strategic rationale for the demerger of LPI’s WA hard rock lithium exploration assets. The Demerger will offer existing LPI shareholders the opportunity to create long term value via a new, ASX-listed company.

“LPI has a number of highly prospective assets located in WA that are at an exciting stage of exploration. They comprise three tenements in the Greenbushes region, immediately along-strike from the Talison mine, and three tenements in the Pilbara region (one of which is adjacent to tenements held by Pilbara Minerals).

“These assets deserve their own time, attention and resources, and LPI’s Board believes that it is the best outcome for LPI shareholders to create a dedicated, WA-focused company that has the technical, human and financial resources to advance these exciting assets. A capital reduction and in-specie distribution to LPI shareholders will provide a direct level of participation in the WA assets. It will also allow LPI to focus solely on the development of its flagship Maricunga Lithium Brine Project in Chile, which is at a much more advanced stage of development.

“We are excited by what DemergeCo can achieve and look forward to providing further details on the Demerger in the coming weeks and months.”

The Demerger process

LPI’s WA assets are currently held by a wholly owned subsidiary of LPI, Lithium Power WA Holdings Pty Ltd (DemergeCo).

The Demerger is intended to be undertaken via a capital reduction to affect an in-specie distribution of DemergeCo shares to LPI shareholders, pro rata to their shareholding in LPI, on a record date to be determined by the LPI Board. DemergeCo will apply for admission to the official list of ASX, and for quotation of its shares on ASX, in conjunction with the Demerger.

LPI expects this process to be completed in the first half of 2022, conditional to all necessary approvals having been acquired.

The Demerger is subject to, among other things, LPI shareholder approval. LPI expects to release a notice of meeting seeking to obtain this approval in the first quarter of 2022. The notice of meeting will summarise the advantages and disadvantages of the process and the key risk factors. It will also provide further information on the Demerger, including the key dates.

LPI will apply for a class ruling from the Australian Tax Office to confirm that Demerger relief is available pursuant to the Income Tax Assessment Act 1997 (Cth). The Demerger is subject to a satisfactory ruling being received from the ATO regarding the tax implications for LPI shareholders, among other matters.

The process is also subject to final approval from LPI’s board. LPI reserves the right to vary the proposed terms of, or not proceed with, the Demerger in its absolute discretion.

LPI is in the process of assembling a highly capable board and management team to run DemergeCo. Further updates and information on the Demerger and DemergeCo will be provided by LPI in due course.

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