Li-FT Power (TSXV: LIFT; US-OTC: LIFFF), which claims to have Canada’s third-largest maiden hard rock lithium resource, said this week that an unnamed investor is buying 9.99% of the company for $21.3 million.
The junior, which acquired the Yellowknife project in The Northwest Territories two years ago, is selling 2.7 million shares for $5.6575 apiece in an unbrokered private placement that’s due to close by Nov. 12. The deal included an additional 1.6 million shares at $3.65 each to the same shareholder.
The capital raising is excellent news for Li-FT as it’s now likely fully funded with $27-million for a Yellowknife preliminary economic assessment due by next June and environmental studies for permiting, Cormark Securities mining analyst Shannon Gill said in a note on Friday.
“The strategic investment is another positive indicator for the sector, and hard rock lithium assets in particular,” Gill said.
“Continued M&A in the lithium space supports a potential pricing floor—recalling SQM (NYSE: SQM) and Hancock Prospecting’s May takeover of pre-resource Azure Minerals for a more than 40% premium and Pilbara Minerals’ (ASX: PLS) 67% premium offer to acquire Brazilian developer Latin Resources in August.”
Secrecy trend?
The secret investment could be part of a mini-trend among juniors after undisclosed investors bought the same stakes in Asante Gold (CSE: ASE) in September to expand gold mines in Ghana, Collective Mining (TSX: CNL; NYSE: CNL) in March for its Colombian properties and Foran Mining (TSX: FOM; US-OTC: FMCXF) last December. There was also TDG Gold (TSXV: TDG) last October.
The $200-million financing for Foran to advance its McIlvenna Bay copper-zinc-gold-silver project was a mixture of equity and debt. It included the Ontario Teachers’ Pension Fund and Fairfax Financial. Fairfax holds 23% of Foran after $360 million in financing this year, which also saw Agnico Eagle Mines (TSX: AEM; NYSE: AEM) take a 9.9% stake.
The TDG Gold investment was part of a private placement aimed at raising $2.75 million. The proceeds targeted exploration at TDG’s projects in British Columbia, including the former producing Shasta gold-silver mine in the Toodoggone district.
Securities rules allow a backer to buy less than 10% of a publicly traded company anonymously. However, companies with 5% who are intending to buy more must notify the market, and investments considered material to the company must usually be disclosed in quarterly financial statements.
Li-FT CEO Francis MacDonald may comment on the undisclosed investor when the financing closes, investor relations manager Daniel Gordon told The Northern Miner Group by email on Friday.
Shares in Li-FT Power closed 2¢ higher at $4 apiece on Wednesday in Toronto after the financing news. They were at $3.92 by mid-afternoon Friday, valuing the company at $154.6 million.
Yellowknife project
Li-FT said the financing would be used to advance the resource-stage Yellowknife project with more exploration as it plans the economic study by June.
Cormark’s Gill noted the project consists of clustered spodumene pegmatite dykes – similar to Sigma Lithium‘s (TSXV: SGML; NASDAQ: SGML) Grota do Cirilo project in Brazil – in a mining-friendly jurisdiction adjacent to the Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) and De Beers diamond operations. He said the project could potentially generate 112 million tonnes of ore and has a skilled technical team behind it.
“As first movers in lithium exploration in the area, Li-FT’s land package hosts high potential for additional regional success as it continues to explore,” Gill said.
“Along with a responsible approach to land use that involves all stakeholders and proximity to road and rail infrastructure, Li-FT’s potentially generational Yellowknife project should set it apart from its peers in attracting future development partners and offtake agreements—necessities for developing North America’s future lithium assets.”
The project comprises seven targets along the all-season Ingraham Trail highway. The site hosts 50.4 million inferred tonnes grading 1% lithium oxide (Li2O) for 506,000 tonnes of Li2O, or 1.25 million tonnes of lithium carbonate-equivalent, according to the resource issued this month.
CEO MacDonald said at the time the resource ranked among the 10 largest hard-rock projects in the Americas and had “excellent potential to significantly grow through further drill programs.”
An earlier version of this story said Li-FT Power has Canada’s third-largest hard rock lithium resource. It is instead the third-largest maiden hard rock lithium resource.
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