The TSX Venture Exchange has accepted for filing documentation with respect to a transaction between the company, Argentina Litio y Energia S.A., a wholly owned subsidiary of the company, and an arm's-length party (the purchaser). Pursuant to the terms of the transaction, the purchaser shall make the equivalent of a $90-million (U.S.) (in Argentinian pesos) investment in the subsidiary to acquire 19.9 per cent of the issued and outstanding shares of the subsidiary, subject to an exchange right as described below.

Pursuant to an exchange agreement, the company granted the purchaser an irrevocable right to exchange all of its shares in the subsidiary for such number of shares of the company equal to 24.844 per cent of: (i) the outstanding parent shares (on an undiluted basis) as of the date of the exchange agreement; and (ii) parent shares issued by the company (between the date of the exchange agreement and the date the purchaser exercises the exchange right) upon the exercise of warrants, stock options or other securities convertible or exchangeable into parent shares existing as of the date of the exchange agreement ((i) and (ii) together, the exchange shares), subject to certain exchange conditions. Following the issuance of exchange shares, the purchaser will own at most 19.9 per cent of the parent shares (on an undiluted basis). In addition, the company will grant the purchaser an irrevocable right (the top-up right) to subscribe for additional parent shares if necessary for the purchaser to achieve a 19.9-per-cent interest in the parent shares (on an undiluted basis), subject to the prior approval of the TSX-V. Any additional shares the purchaser elects to purchase pursuant to the top-up right will be issued at the maximum discounted market price permitted under the rules and policies of the TSX-V, unless the top-up right is exercised after an acquisition of the company, in which case the subscription price under the top-up right will be the preannouncement market price of shares of the company. The purchaser will not have the right under the exchange right and the top-up right to acquire more than 19.9 per cent of the outstanding common shares following the issuance of exchange shares and additional shares, if any. The exchange agreement also provides the purchaser with observer rights to attend board meetings of the company for as long as the purchaser owns at least 10 per cent of the issued and outstanding shares of the subsidiary.

Pursuant to a lithium offtake agreement, the subsidiary has agreed to sell to the purchaser, and the purchaser has agreed to purchase from the subsidiary, up to 15,000 tonnes per annum of lithium produced by the subsidiary over a seven-year period, subject to the terms and conditions set out in the offtake agreement. After the initial seven-year term, the offtake agreement may be extended by mutual agreement for an additional number of years. The price of lithium products sold by the subsidiary under the offtake agreement will be based on an agreed market-based price formula at the time of each shipment. The commencement of the supply obligation of the subsidiary is conditional on the successful start of commercial production at one or more of its projects.

Pursuant to a shareholders agreement relating to the subsidiary and the purchaser's ownership of the subsidiary shares: (i) the purchaser will have the right to nominate one director to the board of directors of the subsidiary (the purchaser director) for as long as the purchaser has an ownership position of not less than 10 per cent of the issued and outstanding subsidiary shares; (ii) certain corporate decisions of the subsidiary may not be undertaken without the affirmative vote the purchaser director or the approval by shareholders holding more than 90 per cent of the issued and outstanding of the subsidiary shares; (iii) right of each shareholder to maintain its ownership percentage in any equity offerings by the subsidiary; (iv) transfer restrictions including, rights of first refusal, drag-along and tag-along rights; and (v) right of first offer for the purchaser to provide project financing and any other borrowing by the subsidiary.

Upon exercise of the exchange right, the company will enter into an investor rights agreement (IRA) with the purchaser, which will allow the purchaser to: (i) nominate one director to the board of directors of the company for as long as the purchaser has an ownership position of not less than 10 per cent of the issued and outstanding of the parent shares; and (ii) pre-emptive right to maintain ownership percentage in certain follow-on issuances of parent shares or securities convertible into parent shares, subject to the prior approval of the TSX-V.

For further details, please refer to the company's news releases dated Sept. 27, 2023, and Oct. 5, 2023.