Lithium X Energy Corp. and NextView New Energy Lion Hong Kong Ltd. have entered into a definitive agreement, pursuant to which NextView has agreed to acquire all of the issued and outstanding common shares and warrants of Lithium X. Lithium X’s flagship project, Sal de los Angeles lithium brine project, as well as Arizaro lithium brine project are located in the prolific “lithium triangle” in mining friendly Salta province, Argentina.

Transaction highlights:

  • Cash offer of $2.61 per share;
  • Directors and officers of Lithium X holding approximately 6 per cent of the outstanding Lithium X shares have entered into voting agreements to support the transaction;
  • Under the terms of the arrangement agreement, each common share of Lithium X will be purchased by NextView at a price of $2.61 per share, and each warrant of Lithium X will be purchased by NextView at a price of one cent per warrant. The consideration to be received by the Lithium X shareholders pursuant to the arrangement represents a premium of 29.4 per cent to the 20-day volume-weighted-average trading price of the Lithium X shares on the TSX Venture Exchange ending on Dec. 15, 2017, and a 22.5-per-cent premium to the closing price of the Lithium X shares on the TSX Venture Exchange on Dec. 15, 2017. The warrant consideration is nominal, reflecting the fact that the value of the warrants is being crystalized at an amount less than their $2.75 strike price. On completion of the arrangement, all options to purchase Lithium X shares that have not been exercised will be automatically terminated under the terms of Lithium X’s option plan. All restricted share units will be redeemed for a cash amount per RSU equal to the share consideration.

Benefits to Lithium X shareholders

  • Provides immediate liquidity to common shareholders in the form of $2.61 per share;
  • Represents premium to shareholders of 29.4 per cent based on the 20-day VWAP ending on Dec. 15, 2017;
  • Removes future financing, dilution, commodity, construction, execution and country risk;
  • Transaction represents a premium of 37.4 per cent over the highest price at which Lithium X has completed a financing ($1.90) since becoming a lithium explorer and developer.

Lithium X chairman, Paul Matysek, and Brian Paes-Braga, founder, chief executive officer and director, stated: “Today’s announcement successfully delivers on our team’s commitment to maximize value for our shareholders. Lithium X was founded at a minimal market value and went public two years ago, with a mission to help wean the world off fossil fuels through the development of high-quality lithium deposits. We believe this $265-million transaction puts our flagship asset, Sal de los Angeles, in the hands of a well-funded, technically capable team. We thank NextView and its partners for their commitment to this transaction and provide our best wishes in their continuing efforts to complete on our mission.”

Yaping He, managing partner of NextView, stated: “The acquisition of Lithium X’s wholly owned flagship project, the Sal de los Angeles lithium project represents a key cornerstone investment in NextView’s strategy of developing a leading global player in the new energy sector. The SDLA project has a mineral resource exceeding two million tonnes of lithium carbonate equivalent.”

Transaction summary

The proposed business combination will be effected by way of a plan of arrangement completed under the Business Corporations Act (British Columbia). The arrangement will be subject to the approval of at least 66 per cent of the votes cast by Lithium X shareholders and warrantholders at a special meeting expected to take place in February, 2018. In addition to shareholder approval, the arrangement is also subject to the receipt of certain regulatory, court and stock exchange approvals and other closing conditions customary in transactions of this nature.

The arrangement agreement has been unanimously approved by a special committee of independent directors of Lithium X and by the full board of directors of Lithium X. GMP Securities LP has provided a fairness opinion to the special committee and the board of directors of Lithium X to the effect that, as of the date hereof, based upon and subject to the assumptions, limitations and qualifications set out in such fairness opinion, the consideration under the transaction is fair, from a financial point of view, to Lithium X shareholders.

Directors and executive officers of Lithium X, holding in aggregate approximately 6 per cent of Lithium X’s outstanding common shares, have entered into customary voting support agreements in favour of the arrangement.

The arrangement agreement includes customary deal protection provisions including a non-solicitation covenant on the part of Lithium X and gives Lithium X the right to accept a superior proposal in certain circumstances and terminate the arrangement agreement. NextView has a five-day right to match any superior proposal. The arrangement agreement also provides for the payment by Lithium X of a $15.9-million termination fee if the arrangement agreement is terminated in certain circumstances and also a reverse break fee of $20-million payable by NextView to Lithium X in circumstances in which the arrangement is not completed as a result of a default by NextView. The reverse break fee has been secured through the deposit of $16-million (U.S.) in trust with Lithium X’s counsel in Hong Kong, subject to the terms of an escrow agreement under which those funds may not be released without the consent of both parties.

Further information regarding the arrangement will be contained in an information circular that Lithium X will prepare, file and mail in due course to shareholders in connection with the special meeting of Lithium X shareholders to be held to consider the arrangement. Shareholders are urged to read the information circular once available as it will contain additional important information concerning the arrangement. The arrangement agreement will be filed on SEDAR.

Advisers and counsel

GMP acted as financial adviser to the board of Lithium X. Stikeman Elliott LLP is acting as legal counsel to Lithium X. Credit Suisse is acting as financial adviser to NextView. Blake, Cassels & Graydon LLP is acting as legal counsel to NextView.

About Lithium X Corp.

Lithium X is a lithium exploration and development company with a goal of becoming a low-cost supplier for the burgeoning lithium battery industry. The company holds two projects in in the prolific lithium triangle in mining-friendly Salta province, Argentina, as well as participating in the Clayton Valley in Nevada through its ownership interest in Pure Energy Metals Ltd. The company’s wholly owned flagship project is the Sal de los Angeles lithium brine project.

About NextView

NextView is an active investment firm with offices in Beijing and Shanghai. It manages over 30 billion (renminbi) assets and invests in new energy, resources, TMT, sports and consumer sectors.

Known for its investment performance in China resources sector, NextView is the second largest shareholder of Tibet Summit Co., Ltd. It has also successfully invested in Western Mining Co., Ltd. Both Tibet Summit and West Mining are A-share listed companies in China.

We seek Safe Harbor.


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