Dakota Minerals - Lynas Find - $8 million Sale Transaction
Pilbara Minerals has agreed to buy 100% of Dakota Mineral's Lynas Find lithium project in WA's Pilbara. The total consideration for the transaction is up to $8 million, with a $4 million cash payment on completion of the sale and the remainder payable subject to the extension/grant of the relevant tenements identified in the sale over a period of up to 12 months as either cash or Pilbara shares. The proceeds will allow Dakota to accelerate the company’s European‐focused lithium strategy.
Dakota Minerals Limited (“Dakota”, “DKO”, or “Company”) is pleased to announce that it has entered into a binding agreement (“Agreement”) with Pilbara Minerals Limited ASX:PLS (“Pilbara”) whereby Pilbara will acquire 100% of Dakota’s Lynas Find lithium project (“Project”).
The total consideration for the transaction is up to $8.0 million which comprises a $4.0 million cash payment on completion of the sale, a $1.0 million cash payment on the grant of extension of term in respect of E45/3648 and further payments upon the grant of exploration licences in respect of certain applications of up to $3.0 million in total over a period of up to 12 months after signing as either cash or Pilbara shares (30 day VWAP) at Pilbara’s election.
The transaction, and the proceeds raised through it, will now allow Dakota Minerals to accelerate the Company’s European‐focused lithium strategy at a time when major industrial groups in the region are increasing their reliance on the commodity.
Under the terms of the Agreement, Dakota will sell to Pilbara all of Dakota’sinterests in the Project, which comprise:
- Exploration Licence E45/3648, Prospecting Licence P45/2783 and Exploration Licence 45/4523; and
- subject to them being granted and transferred to Pilbara within 12 months, Exploration Licences E45/4624, E45/4633, E45/4640 and E45/4689.
The consideration for Pilbara’s acquisition of the Project is an amount of up to A$8,000,000 to be paid in multiple tranches as follows:
- A$4,000,000 to be paid in cash to Dakota upon completion of the sale;
- A$1,000,000 to be paid in cash to Dakota upon the later of completion of the sale and the grant of an extension of term in respect of E45/3648; and
- for a period of 12 months from the execution of the Agreement, upon each of the four Exploration Licence applications being granted and transferred to Pilbara, an amount of A$750,000 to be paid in cash to Dakota or, if Pilbara elects, by issuing to Dakota fully paid ordinary sharesin Pilbara of equal value based on the 30 day volume weighted average price (VWAP) of Pilbara shares up until the day immediately prior to relevant tenement transfer.
Pilbara isresponsible for pursuing the grant of each of the four Exploration Licence applications at its own expense.
If any of the applications have not been transferred to Pilbara within 12 months from the execution of the Agreement then, unless the parties otherwise agree, all rights and interests in the non‐transferred tenements or applications will revert back to Dakota and Pilbara will have no further payment obligations under the Agreement.
Completion of the sale is conditional upon the satisfaction of various conditions on or before 30 November 2016 including:
- Dakota announcing to the ASX a JORC compliant Mineral Resource of greater than 5 million tonnes at greater than 1.2% Li2O;
- due diligence being completed to Pilbara’s satisfaction;
- Asgard Metals Pty Ltd and Slipstream Resources Investments Pty Ltd as trustee for Slipstream Capital, from which Dakota purchased most of its rights and interest in the Project tenements, waiving their respective rights to lodge a caveat over the Project tenements under their sale agreement with Dakota dated 16 December 2015;
- Dakota being registered as the 100% legal and beneficial holder of E45/4523, E45/3648 and P45/2783; and
- the parties obtaining Ministerial consent under the Mining Act 1978 (WA) to the transfer of E45/4523 from Dakota to Pilbara.
Dakota has lodged transfer forms for E45/3648 and P45/2783 with the Department of Mines and Petroleum and is in the process of seeking Ministerial consent for the transfer of E45/4523 to Dakota. Dakota and Pilbara will now seek a further Ministerial consent for the subsequent transfer of E45/4523 to Pilbara pursuant to the Agreement.
Dakota Minerals’ Lynas Find lithium project tenement portfolio covers the same lithium‐rich pegmatite belt, Pilgangoora, as the 2014 Pilbara Minerals discovery, and is of strategic value to Pilbara.
Whereas Pilbara Minerals are focusing on Australia, Dakota’s decision to sell the Project is based on the strength of Pilbara’s offer as well as the Board’s desire to generate capital in order to focus on the Company’s stated priority of fast‐tracking the Company’s lithium projects in Portugal under its European lithium strategy.
Dakota Minerals CEO David Frances commented: “The directors see this transaction as a win for Dakota shareholders. The transaction puts the Company in a very strong financial position to rapidly advance its strategy of becoming a globally significant lithium Company and leading supplier of lithium hydroxide and lithium carbonate to the rapidly developing European battery industry.”