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Australia's Lithium Power International (LPI), together with its partners Minera Salar Blanco (MSB) and Li3 Energy, has secured funding to carry out phases I and II of the exploration and appraisal of the Maricunga lithium brine project, in Chile's Atacama region (III).
Last month the three partners announced the establishment of a new JV entity, called NewCo. LPI has a 50% stake in NewCo and MSB and Li3 hold 32.3% and 17.7% stakes, respectively.
NewCo is the owner of the Cocina 19-27, Litio 1-6, Blanco and Camp 1 tenements located in the Maricunga salt flat.
LPI's local subsidiary, LPI Chile, confirmed its intentions to acquire from MSB three options over the San Francisco, Salamina and Despreciada tenements. LPI is due to issue MSB 16mn ordinary shares, subject to LPI shareholder approval at its next annual general meeting in late November.
These optional tenements will be transferred to NewCo by LPI Chile. It is expected that the exercise of the option rights and payment of the exercise price of US$5.22mn will take place on or before October 21.
LPI said that in order to move forward with the project, LPI will provide NewCo with an initial capital injection of US$8.38mn, which will be funded from a combination of its existing cash reserves and the proceeds of a Aus$12mn (US$9.15mn) capital raising with institutional and sophisticated investors.
The funding will go toward phases I and II of the development program which will include 16 exploration wells, two pumping test wells, a new JORC lithium resource report, lithium carbonate and potash pilot plants, evaporation ponds, a camp and other infrastructure and facilities. The work is due to be carried out next year.
A final earn-in payment of US$13.6mn to NewCo will be made in stages from November 2017 until December 2018 to fund a full definitive feasibility study and the approval of an environmental impact assessment, both expected to be completed by late 2018.
LPI said that any further funding required for the project beyond this final earn-in payment is to be provided on a pro-rata basis by the three JV partners.
LPI CEO Martin Holland said results of the exploration program will be divulged as they become available during 4Q16, adding that, next year, the new JORC resource statement will be produced and construction of a pilot lithium plant will start.