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Li3 Energy Teams With One Of The World's Largest Steel Manufacturers For Lithium Exploration

SANTIAGO, Chile, Aug. 25, 2011 /PRNewswire/ -- Li3 Energy, Inc., (OTC.BB.LIEG –News) ("Li3", "Li3 Energy" or the "Company"), a US-listed and South American based global exploration company in the lithium and minerals sector is pleased to announce that it has executed a Securities Purchase Agreement with POSCO Canada Ltd. ("POSCAN"), a wholly-owned subsidiary of POSCO, (NYSE: PKX), a Republic of South Korea multinational global leader.  POSCO, with over $60 billion in revenue, is one of the largest steel manufacturers in the world and has global operations in energy, chemicals and materials. POSCO has been actively evaluating, pursuing and partnering on leading lithium projects globally.

Li3, with a controlling interest in its flagship Maricunga property is now focused on implementing the Exploration and Development plan which includes securing leading well drilling contractors, seismic surveyors and engineering firms, as well as the necessary governmental drilling permits to begin the advancement of the project. Li3 is also identifying potential additional land acquisitions to support the project while also evaluating proprietary technologies that could supplement the salar's natural evaporation process and potentially improve the economics of the project. The key terms of the Securities Purchase Agreement include:
  • An initial investment to purchase $8MM of Units (each Unit consists of one share of common stock and a three-year warrant to purchase one share of common stock at an exercise price of $0.40) at a price of $0.21 per Unit;
  • A follow-on investment of $10MM of additional Units at $0.21 per Unit upon satisfaction of certain conditions, including (i) an NI 43-101 report concluding that proceeding to the Feasibility Study phase for the Maricunga project is warranted, (ii) completion of Li3's proposed work program and (iii) having the necessary permits and approvals in place for building and operating a brine test facility on the Maricunga property;
  • The common shares purchased by POSCAN, shall be locked up and may not be sold until the earlier of: (i) 9 months after their issuance date or (ii) November 20, 2012;
  • Board representation - Li3 shall appoint a director nominated by POSCAN to its Board of Directors and shall continue to nominate a POSCAN, designee at each annual meeting for as long as POSCAN, owns not less than 10% of the issued and outstanding shares of Li3;
  • After the initial investment, POSCAN and Li3 shall discuss and evaluate the development, financing and construction of a test facility on the Maricunga property; in such event, Li3 shall (i) supply POSCAN brine and other materials and utilities and (ii) assist POSCAN in obtaining any rights, licenses and permits required to build this facility;
  • Li3 is also providing POSCAN with registration rights, pro-rata preemptive rights with respect to future financings, and certain negative covenants in connection with the transaction.

Luis Saenz, CEO of Li3, stated: "We are extremely pleased to have executed this agreement with POSCO. We began earnest discussions in March of this year and to consummate this transaction in less than six months is testament to the extraordinary efforts by a dynamic, proactive and extremely professional team from POSCO and the cooperation and ability of Li3's management team and advisors. Being chosen as one of their lithium and other minerals project partners, coupled with the financial and technical support this relationship brings and the potential commercial opportunities we hope to derive from a global strategic partner of this magnitude, we believe speaks to the strength of Li3, the merit of Maricunga, and potential of our future plans. We look forward to working together with POSCO as we advance the Maricunga project."

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