TANTALEX LITHIUM CONCLUDES WITH GLENCORE FOR LITHIUM MARKETING AND $US 5 MILLION PLUS ONE THIRD OF CAPEX IN FINANCING
Tantalex Lithium Resources Corp. has concluded a lithium marketing offtake agreement and convertible facilities agreement up to $5-million (U.S.) with Glencore AG, as previously announced in Tantalex's news release of Sept. 8, 2023.
The marketing offtake agreement is for 100 per cent of the lithium to be produced from the company's Manono lithium tailings project from the date of the start of commercial production throughout life of mine. Glencore shall have the sole responsibility for all sales and will contribute one-third of the total capital expenditures (capex) of the Manono lithium tailings project, subject to:
- Glencore's satisfactory review of the feasibility study in respect of the Manono lithium tailings project to be completed within 60 days of receipt of final version of the feasibility study;
- The capex being fully financed by one or more financial institutions, or equity raised by Tantalex; and
- The drawdown schedule being discussed and mutually agreed by both parties, and the other lenders;
- Other customary conditions precedent.
Eric Allard, Tantalex Lithium chief executive officer, commented: "This is again a significant milestone for us as we pursue with our objective to derisk the project and keep with our target of bringing our Manono lithium tailings project into production. With our recent PEA, which outlined a $147-million (U.S.) capex for a 112,000 tpa [tonne-per-annum] SC6 production, this strategic support from Glencore will solidly complement our efforts to firm up the other two-thirds of the capital expenditure costs."
Under the convertible facilities agreement, Glencore has agreed to make available to the company: (a) a convertible term loan facility in an amount up to $2-million (U.S.) (facility A); and (b) a convertible term loan facility in an amount up to $3-million (U.S.) (facility B) (together, the facilities).
Facility A is made available at the closing date. Facility B is made available subject to the satisfaction of certain conditions precedent. The company has indicated to Glencore that it intends to satisfy such conditions precedent promptly. The facilities shall terminate on Dec. 1, 2025.
The company has agreed to pay to Glencore a facility fee in an amount equal to 1.5 per cent of the aggregate amount of the facilities as at the closing date.
The facilities are convertible at Glencore's option. At any time during the conversion period (defined below), Glencore has the option to subscribe for common shares in the capital of the company at the relevant conversion price. The conversion price for the facilities is equal to the higher of: (a) the closing price of the common shares published by Bloomberg for the scheduled trading day immediately prior to the closing date; and (b) the 20-day volume-weighted average trading price of the common shares published by Bloomberg for the 20 scheduled trading days immediately after the closing date less a 25-per-cent discount, in each case converted into U.S. dollars.
The convertible facilities agreement provides for a conversion period that starts on the date that is four months and a day after the day on which the outstanding principal amount being converted was advanced by the lender and ends at 5:30 p.m. (London time) on the business day before the termination date.
At any time during the conversion period, Glencore has the option (in its absolute discretion) to convert specified amounts from the amounts that the company has borrowed and which remain outstanding at that time under the convertible facilities agreement into common shares. Conversion amounts owing shall be converted into conversion shares by dividing the applicable conversion amount by the conversion price. The issue of the conversion number of conversion shares to Glencore in accordance with the convertible facilities agreement shall fully repay the applicable correlated conversion amount that was outstanding under the convertible facilities agreement and completely discharges the obligations of the company to repay that applicable conversion amount.
Glencore is not entitled at any particular time to receive a conversion number of conversion shares such that Glencore would hold, immediately postconversion, more than 20 per cent of the common shares (including any common shares held by Glencore prior to such conversion). Glencore did not hold any common shares prior to entering into the convertible facilities agreement.
Each loan bears interest at rate equal to three-month CME term SOFR (secured overnight financing rate) plus a margin.
The convertible facilities agreement contains events of default, representations, and warranties, covenants and provisions relating to security and indemnities that are customary for similar transactions.
Qualified person
The scientific and technical content of this news release has been reviewed and approved by Gary Pearse, MSc, PEng, who is a qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects (NI 43-101).
About Tantalex Lithium Resources Corp.
Tantalex Lithium is an exploration-and-development-stage mining company engaged in the acquisition, exploration, development and distribution of lithium, tin, tantalum and other high-tech mineral properties in Africa. It is currently focused on developing its lithium assets in the prolific Manono area in the Democratic Republic of the Congo -- the Manono lithium tailings project and the pegmatite corridor exploration program.
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