Lepidico & Desert Lion Energy complete Plan of Arrangement

  • Business combination between Lepidico and Desert Lion Energy completes
  • Lepidico now holds an 80% interest in the highly prospective Karibib Lithium Project which covers approximately 1,000km2
  • Two drill rigs have already arrived at the Karibib Lithium Project and drilling will start imminently
  • Feasibility Study work to integrate the Karibib Lithium Project with the Phase 1 Plant Project Study commenced earlier this week

Lepidico Ltd (ASX:LPD) (“Lepidico” or “Company”) is pleased to announce the completion of the previously announced plan of arrangement (the “Arrangement”), with Desert Lion Energy Inc. (“Desert Lion”) whereby Lepidico has acquired all of the outstanding common shares of Desert Lion for consideration of 5.4 Lepidico ordinary shares for every 1 Desert Lion common share (the “Exchange Ratio”). The Arrangement, which was announced on May 7, 2019, was approved by the Desert Lion’s shareholders at an annual general and special meeting held on June 27, 2019.

Under the terms of the Arrangement, the Company has issued:

a)  571,157,062 new fully paid ordinary shares (“LPD Shares”) to existing Desert Lion shareholders;
b) 39,183,982 new options at exercise prices ranging from $0.02 – $0.35; and
c) 139,797,500 warrants at exercise prices ranging from $0.04 to $0.044.

The outstanding convertible notes of Desert Lion have been adjusted to allow for the acquisition of LPD Shares upon their exercise (reflecting the Exchange Ratio). The Company may therefore issue up to 108,000,000 new LPD Shares upon conversion of the outstanding convertible notes at the election of the holder, on or before 7 December 2020. The issue of these LPD Shares will be made pursuant to the Company’s existing 15% placement capacity under Listing Rule 7.1.

The Company has also issued 76,020,767 new fully paid ordinary shares to certain creditors of Desert Lion in settlement of debt arrangements, which Desert Lion had intended to settle in common shares at the time of the announcement of the Arrangement but which had not been allotted at transaction close.

Pilot Plant continuous operation starts

Lepidico Ltd (ASX:LPD) (“Lepidico” or “Company”) is pleased to advise that 24 hour operation of the Pilot Plant has commenced and the first lithium sulphate liquor intermediate has been produced.

Pilot Plant leach discharge filter operations restarted mid-last week following receipt of replacement polypropylene filter cloths that were sourced locally in Perth, Western Australia. The L-Max® impurity removal circuit has now been successfully commissioned on leach liquor, allowing continuous plant operations to commence on 9 July, marking the commencement of Pilot Plant Campaign 1.

It is intended that approximately 4,000 litres of lithium sulphate liquor will be produced and stockpiled for LOH-MaxTM development trials, which are scheduled during the September 2019 quarter. Once this material has been collected, the remaining lithium sulphate liquor generated will be fed into the final process stage of the L-Max® Pilot Plant for lithium carbonate production. Pilot Plant operations remain within the operating cost budget.

Desert Lion Energy Obtains Final Order Approving Plan of Arrangement

Lepidico Ltd (ASX:LPD) (“Lepidico” or “Company”) is pleased to advise that that Desert Lion
Energy Inc. (TSXV: DLI) (“Desert Lion Energy”) has obtained a final order from the Ontario
Superior Court of Justice (Commercial List) approving a statutory plan of arrangement (the
“Arrangement”) under the Business Corporations Act (Ontario) pursuant to which a wholly owned subsidiary of Lepidico will acquire all of the outstanding common shares of Desert Lion Energy (the “Common Shares”).

Pursuant to the Arrangement, holders of Common Shares will receive 5.4 Lepidico shares for each Common Share held. Receipt of the final order follows the annual and special meeting of Desert Lion Energy holders of Common Shares held on Thursday, June 27, 2019 in Toronto, Canada, at which shareholders overwhelmingly approved the Arrangement.

The closing of the Arrangement remains subject to the satisfaction of various administrative
conditions. It is expected that the Arrangement will be completed on or about July 10, 2019.

Management teams for Lepidico and Desert Lion Energy plan to travel to Namibia to ensure a
smooth transition and commence exploration activities immediately following the closing.

Pilot Plant operations update

Lepidico Ltd (ASX:LPD) (“Lepidico” or “Company”) advises that Pilot Plant leach discharge
filter operations commenced as per the schedule on 27 June but operations were
temporarily suspended that evening due to degradation of the filter cloths. Subsequent
engagement with the filter Original Equipment Manufacturer (OEM) revealed that nylon
rather than the specified polypropylene filter cloth had been supplied. The OEM has
undertaken, “to provide [Strategic Metallurgy] with replacement cloth under a matter of
urgency” and that, “the fastest shipment method will be employed to deliver them to site.”

In the interim, alternative filtration equipment that is on site is being used to allow Pilot
Plant commissioning on concentrate feed to advance to the point where the next filter
downstream is required.

Operating costs for the Pilot Plant will not be materially impacted during shutdowns and this
advanced commissioning phase. Once the replacement parts are received it is estimated
that normal Pilot Plant operations will be able to resume within 24 hours.

Desert Lion Energy Shareholders Approve Merger

Lepidico Ltd (ASX:LPD) (“Lepidico” or “Company”) is pleased to advise that Desert Lion
Energy Inc (“Desert Lion”) shareholders approved the acquisition by Lepidico of all of the
outstanding common shares of Desert Lion at its annual general and special meeting of
shareholders (the “AGM”) held on Thursday, June 27, 2019 in Toronto, Canada. Desert Lion
shareholders will receive 5.4 Lepidico shares for each common share of Desert Lion held (the
“Transaction”).

At the AGM, a special resolution approving the Transaction was approved by 99.22% of the
votes cast at the meeting in person or by proxy. The Transaction, which will be effected by
way of a Plan of Arrangement under the Business Corporations Act (Ontario), is subject to
receipt of court and regulatory approvals. The court hearing for the final order to approve
the Transaction is scheduled to take place on July 4, 2019.

The Transaction is expected to be completed by mid-July 2019