Etna Resources Inc. Announces Acquisition of Rights in Additional Lithium Salar
September 22 2009 - 8:00AM
Marketwired
Etna Resources Inc. ("Etna") (TSX VENTURE: ETN) is pleased to
announce that it has entered into an amended and restated share
exchange agreement (the "Restated Agreement") dated September 18,
2009, that amends and restates the previously announced Securities
Exchange Agreement (the "Exchange Agreement"), dated August 18,
2009, with Sociedad Gareste Limitada ("Gareste"), a private limited
liability company organized under the laws of Chile. The Restated
Agreement provides for the acquisition of rights in an additional
lithium salar (the "Lithium Rights Agreement") and the formation of
Priveco (as defined below) as a closed corporation.
The Lithium Rights Agreement will provide for the extraction and
exploitation of lithium, light metals, and commercial salts
(hereinafter, the "Lithium Rights") contained in the Piedra Parada
Salar concessions (the "Concessions") owned by Gareste in the
Atacama Region III, Chile. These concessions total roughly 2,900
hectares and cover the majority of the Piedra Parada Salar. The
Piedra Parada Salar is located approximately 300 kilometres from
Copiapo on serviceable roads at an elevation of 4,130 meters and is
prospective for lithium, magnesium, potassium, and other metals in
waters, brines and sediments.
Upon the closing of the transaction, Etna will obtain interests
in a total of nine Lithium salars in Chile (the "Properties") from
Gareste.
Etna received conditional approval of the Exchange Agreement on
August 25, 2009 from the TSX Venture Exchange (the "Exchange").
Final approval is subject to Etna satisfying certain filing
requirements which include the preparation and filing of a National
Instrument 43-101 compliant technical report (the "NI 43-101
Report") and a title opinion for the Properties (as defined in the
Exchange Agreement, as amended) within 30 days of receiving
conditional approval. The transaction is expected to close in
October following satisfactory completion of these requirements,
including the filing and acceptance by the Exchange of the NI
43-101 Report.
Under the terms of the Lithium Rights Agreement, Priveco will
obtain the Lithium Rights from Gareste by paying: (a) a 2% net
smelter return royalty (the "Piedra Parada NSR") on all lithium,
light metals, and commercial salts produced from the Concessions;
and (b) a payment to Gareste of US$2,000 per month as a lease or
rental remittance to maintain the Concessions through the
exploration stage, which payments will increase to US$5,000 per
month at such time as the Concessions are converted to exploitation
status. Etna anticipates that it will prepare a 43-101 Report for
the Concessions, and if warranted, commission an exploration
program focusing on the lithium, light metal and commercial salt
potential of the deep brines at Piedra Parada.
As was previously disclosed under the terms of the Exchange
Agreement, and confirmed the Restated Agreement, Gareste has agreed
to organize a new Chilean closed corporation ("Priveco") and to
transfer the Properties to Priveco subject to a net smelter return
royalty as described below (the "NSR"), which is in addition to the
Piedra Parada NSR. Etna has agreed to purchase 100% of the common
shares of Priveco (the "Priveco Shares") from the shareholders
thereof (with the exception of one percent of the Priveco Shares
being retained by one Chilean shareholder in order to preserve the
status of Priveco as a closed corporation in accordance with
Chilean law) in consideration for Etna issuing 10,600,000 common
shares to such shareholders. The proposed acquisition is between
arm's length parties. As a result, the proposed acquisition will
not require shareholder approval from the shareholders of Etna.
Etna has also agreed to pay US$50,000 to Gareste on closing to
cover costs incurred in connection with the formation and
organization of Priveco. In addition, Etna has agreed to pay
Gareste a monthly fee of US$25,000 to compensate it for its general
and administrative costs from the execution date to the closing of
the acquisition.
Conditions of Closing
The parties have agreed to close the proposed transaction on or
before January 31, 2010, or such other date as the parties may
agree to in writing. Completion of the proposed transaction will be
subject to certain conditions including: (a) completion of each
party's satisfactory due diligence review of the other, including a
review of the financial condition, business and properties of each;
(b) receipt of all necessary regulatory and exchange approvals; (c)
completion of the NI 43-101 Report; (d) the closing of the Restated
Agreement; (e) closing of a financing of at least $450,000 as
described below; (f) the appointment of two new directors to the
board of Etna as identified by Gareste; and (g) the granting of the
NSR and Piedra Parada NSR to Gareste. The NSR is payable on each of
the eight applicable salars (excluding Piedra Parada) following
commencement of commercial production therefrom, to a maximum of
US$6 million per salar. Priveco may, prior to commencement of
commercial production at any salar, purchase one-half of the NSR
for US$2 million on a per-salar basis.
Business of Gareste
Gareste is a private Chilean company established in the 1990's
and engaged in the business of mineral exploration in Chile. The
existing portfolio of rights in the 9 salars to be transferred to
Priveco includes surface brine lakes or surface flow at Lagunas
Verde, Lagunas Bravas and Rio Salado/Pedernales, and six additional
lithium brine projects, all located in the mineral rich Atacama
Region III. The rights in these 9 lithium salars cover a cumulative
area in excess of 11,500 hectares, all accessible via serviceable
roads. It is believed that the salars collectively carry the
potential to host lithium in three distinct brine types: surface
water, shallow and deep brines.
Financing
The closing of the Agreement, as amended, is conditional upon
Etna completing an equity financing resulting in a minimum of
$450,000 to be present in the Etna treasury, net of existing
obligations. Etna proposes to announce a unit offering on terms
acceptable to the Exchange shortly.
On Behalf of the Board,
ETNA RESOURCES INC.
Jerry A. Minni, Director & Chief Financial Officer
This press release contains projections and forward-looking
information that involve various risks and uncertainties regarding
future events. Such forward-looking information can include without
limitation statements based on current expectations involving a
number of risks and uncertainties and are not guarantees of future
performance of the Company such as the statement that (i) the
closing of the acquisition will occur and that closing will occur
on or prior to January 31, 2010; (ii) the closing of the financing
will occur shortly; (ii) the belief that the Properties may carry
the potential to host lithium in three distinct brines types; (iv)
the transaction is expected to close in October following
satisfying certain filing requirements; and (v) Etna anticipates
that it will prepare a NI 43-101 Technical Report for the
Properties and may commission an exploration program focusing on
the lithium, light metal and commercial salt potential of the deep
brines. There are numerous risks and uncertainties that could cause
actual results and the Company's plans and objectives to differ
materially from those expressed in the forward-looking information,
including the (i) inability to obtain Exchange approval and close
the acquisition and financing for any reason; (ii) adverse market
conditions; (iii) a decrease in demand for and price of lithium;
and (iv) general uncertainties with respect to mineral exploration
in general. Actual results and future events could differ
materially from those anticipated in such information. These and
all subsequent written and oral forward-looking information are
based on estimates and opinions of management on the dates they are
made and are expressly qualified in their entirety by this
notice.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in the United
States. The securities have not been and will not be registered
under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act"), or any state securities laws and may not be
offered or sold within the United States or to "U.S. Persons", as
such term is defined in Regulation S under the U.S. Securities Act,
unless an exemption from such registration requirements is
available.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Etna Resources Inc. Jerry A. Minni Director &
Chief Financial Officer 604-683-8610
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