Completion of Royalty Agreement

RNS Number : 4177W

Bradda Head Lithium Ltd

22 December 2021

 

22 December 2021

Bradda Head Lithium Ltd.

("Bradda Head", "Bradda" or the "Company")

Completion of Royalty Agreement Between Bradda Head and Lithium Royalty Corporation

Subscription for new Ordinary Shares

Bradda Head Lithium Ltd. (AIM: BHL), the North America-focused lithium development group, announces that a royalty agreement (the "Agreement") between the Company and Lithium Royalty Corporation ("LRC") has been completed on 21 December 2021.

As announced on 15 November 2021, an initial binding letter of intent ("LOI") had been signed, which was subject to the satisfaction of certain conditions precedent, including satisfactory due diligence ("DD") and a site visit from LRC. These conditions have now all been satisfied.

In addition to signing the Agreement, LRC has completed a subscription for 19,481,475 new ordinary shares of the Company at a price of 7.68 pence per share (being the 10-day volume-weighted average price of ordinary shares on AIM prior to signing the LOI) (the "LRC Subscription"), for a consideration of US$2 million, at an exchange rate of GBP1:USD1.33674. Alongside the LRC Subscription, a Director of the LRC has invested along the same terms, subscribing for 4,870,369 new ordinary shares for total consideration of US$0.5 million (together the "Subscription").

Highlights of the Royalty Agreement:

• Total consideration paid by LRC for the royalty is up to US$8 million

• LRC granted a 2% gross overriding royalty (GOR) over Bradda Head's sedimentary lithium claims in Arizona (Wikieup project and Burro Creek project) leaving the Company's pegmatite and brine projects unencumbered.

• Royalty consideration will be paid to Bradda Head at three predetermined milestones:

o  US$2.5 million on Closing

o  US$2.5 million once Bradda Head has obtained a 1 million tonne (Mt) lithium carbonate equivalent (LCE) resource with a minimum lithium grade of 800 parts per million (ppm)

o  US$3 million once Bradda Head has obtained a 2.5Mt LCE resource with a minimum lithium grade of 800 parts per million (ppm)

• LRC has also subscribed for US$2 million of new ordinary shares (along with US$0.5million via a further subscription) alongside the royalty closing, at the 10-day volume-weighted average price (VWAP) prior to the signing of the LOI.

• Funds from the royalty will be used to develop Bradda's 47km² of sedimentary claims in Arizona

Use of Proceeds

• Proceeds from the royalty payments will be used to develop Bradda's 47km² of sedimentary claims in Arizona, which includes c.24km² of claims added since IPO.

• Proceeds from the royalty will enable Bradda to produce an early-stage technical study; work undertaken will likely include drill programmes across all 47km², further metallurgical testing, baseline studies and social outreach programmes.

• Proceeds from the US$2.5 million placement have no limitations placed on them and can be used to develop the Company's pegmatite and brine projects.

Charles FitzRoy, CEO of Bradda Head Lithium, commented:

"We are delighted that we have now completed the Royalty Agreement. The Agreement further endorses the confidence in and inherent value that we believe our assets have, as well as in the future potential of the Company and our strategy given LRC's investment in Bradda."

"The importance of this investment cannot be understated for Bradda Head and will allow us to develop our sedimentary claims to an initial technical study level and progress our metallurgical test work without the need for further funds from the market for our clay assets. It also frees up Company funds to push ahead aggressively with on our San Domingo pegmatite prospect located in Arizona enabling the Company to be active on two major opportunities."

"LRC's stamp of approval reinforces what our geologists believe about the potential at Wikieup and Burro Creek. Work is underway at all our assets and significant news flow is coming."

"This is another significant step towards our end goal of becoming a battery-grade lithium provider to the lithium-hungry US market."

Key Terms of the Royalty Agreement

1.  LRC will pay to Bradda upon closing the sum of US$2.5 million for granting of the Royalty. LRC will pay to the Company an additional US$2.5 million upon the Company publicly reporting a 1 million tonne lithium carbonate equivalent (LCE) Mineral Resource with a minimum lithium grade of 800 parts per million (ppm). LRC will pay to the Company an additional US$3 million upon the Company publicly reporting a 2.5 million tonne LCE Mineral Resource with a minimum lithium grade of 800ppm.

2.  Gross Revenue definition including but not limited to:

a.  Gross Revenue being the aggregate gross proceeds received by the Company for the sale of products, minerals, materials, or any other item (collectively, "Minerals") whether processed on or off the property comprising the Projects,

b.  in no event shall the calculation of Gross Revenue deduct any costs from the amount of such revenue, including the cost of mining, milling, leaching, smelting, refitting, concentrating or any other processing costs, or costs associated with transportation, insurance, storage selling, marketing, brokerage, taxes, or royalties, paid or payable by the Company. there shall be some permissible deductions for State related royalties, and

c.   if Minerals are sold to a non-arm's length party, then a mutually agreed third-party reference price shall be used as the deemed market price.

Key Terms of the Subscription Agreement

1.  LRC has subscribed for and will be issued 19,481,475 shares for a consideration of US$2 million at an exchange rate of GBP1:USD1.33674).

2.  A Director of LRC will also upon completion pay to Bradda the sum of US$0.5 million and be issued 4,870,369 new ordinary shares.

3.  In aggregate, the Company has agreed to issue 24,351,844 new ordinary shares (the "Subscription Shares") for total consideration of US$2.5 million (the "Subscription Amount"). The subscription price is 7.68p, the 10-day volume-weighted average price (VWAP) prior to the signing of the LOI on 15 November 2021.

4.  Proceeds from the Subscription may be used for the advancement of any of the Company's assets, and are not limited to the sedimentary assets, unlike the royalty proceeds.

5.  In addition to its entitlement to Subscription Shares, in lieu of arrangement fees LRC has been granted warrants over 1,185,687 new ordinary shares, such warrants having an exercise price of 8.85 pence (15% premium to 10-day VWAP) and a two-year term.

Application will be made for the 24,351,844 Subscription Shares, which will rank pari passu with the Company's existing Ordinary Shares, to be admitted to trading on the AIM market of the London Stock Exchange ("Admission"). It is anticipated that Admission will become effective at 8.00 am on 24 December 2021. The Subscription is subject to normal conditions including, inter alia, Admission.

Total Voting Rights

For the purpose of the Disclosure Guidance and Transparency Rules, following the issue of the Subscription Shares the issued share capital of the Company will comprise 317,413,879 Ordinary Shares. The above figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company, under the Disclosure Guidance and Transparency Rules.

About LRC

Lithium Royalty Corp (LRC) is a North American royalty corporation focused on investing in high quality low-cost projects in the battery materials sector with an emphasis on lithium. LRC was founded in 2018 and has now established itself as a leading financier in the lithium industry having completed 14 royalties since inception exclusive of this transaction. Its investments are diversified across the world with exposure in Australia, Argentina, Brazil, Canada, and Serbia. LRC is a signatory to the United Nations Principles for Responsible Investing and seeks to invest in companies with high environmental, social, and governance standards.

For further information please visit the Company's website: https://lithiumroyaltycorp.com

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Contact:

Bradda Head Lithium Limited	[phone]
Charlie FitzRoy, CEO Denham Eke, Finance Director
Beaumont Cornish (Nomad) James Biddle/Roland Cornish	[phone]
Peterhouse (Joint Broker)	[phone]
Charles Goodfellow Duncan Vasey Lucy Williams
Shard Capital (Joint Broker)	[phone]
Damon Heath Isabella Pierre
Red Cloud (North American Broker)	[phone]
Joe Fars
Tavistock (PR)	+ 44 20 7920 3150
Nick Elwes Oliver Lamb Adam Baynes	[e-mail]

 

Notes to Editors

Bradda Head Lithium Ltd. is a North America-focused lithium development group. The Company currently has interests in a variety of projects, the most advanced of which are in Central and Western Arizona: The Burro Creek Project (the Burro Creek East Project and the Burro Creek West Project) and the Wikieup Project.

The Burro Creek East Project has an estimated an Inferred Mineral Resource (JORC) of 42.6 Mt of lithium-bearing clays at an average grade of 818 ppm of lithium for 185,000 tonnes of lithium carbonate equivalent (LCE). The Burro Creek East Project also has additional exploration potential for extensions to the current model of between 50,000 to 300,000 tonnes of lithium carbonate equivalent.

The Group intends to continue to develop its three phase one projects in Arizona, whilst endeavouring to unlock value at its other prospective pegmatite and brine assets in Arizona, Nevada, and Pennsylvania.

All of Bradda Head's licences are held on a 100% equity basis and are in close proximity to the required infrastructure.

Bradda Head is quoted on the AIM of the London Stock Exchange with a ticker of BHL.

 

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