Stardust Power IPO on the NASDAQ creates momentum for Usha Resources

Lithium companies are “out of favor”? At least in the USA, this is only true to a limited extent. The integrated lithium start-up Stardust Power, Inc. (NASDAQ: SDST) has been listed on the NASDAQ for a few days now and – albeit with comparatively low turnover – has achieved a high of more than one billion in market capitalization. At the current share price of around US$ 14, the company is still valued at around US$ 630 million. Stardust Power is developing a lithium refinery in Muskogee, Oklahoma, with a production capacity of up to 50,000 tons of battery-grade lithium carbonate per year. Once completed, Stardust Power expects to secure multiple sources of feedstock from various lithium producers, making the facility one of the largest lithium refineries in the United States. One of the potential lithium sources could be Usha Resources’ Jackpot Lake lithium brine project.

Usha could profit for a long time

Stardust’s successful IPO is therefore directly relevant to Canada’s Usha Resources Ltd (TSXV: USHA; OTCQB: USHAF; FSE: JO0), as Stardust Power has secured the right to acquire up to 90% of Usha’s Jackpot Lake lithium brine project. The listing of Stardust Power is a necessary condition for the signing of a definitive agreement, which in turn would trigger a series of payments to Usha and investment in the Jackpot project. Stardust has already paid US$75,000 to Usha for the Letter of Intent. Upon signing a definitive agreement, an initial payment of US$500,000 would be due to Usha immediately, payable half in cash and half in Stardust shares. US$500,000 is equivalent to approximately $700,000 CAD at the current Canadian dollar exchange rate.

A full earn-in by Stardust would have a volume of US$ 26,025,000. This amount includes work commitments of US$8,000,000 spread over a five-year period and payments totaling US$1,525,000 in cash, US$750,000 in shares, US$15,750,000 in shares or cash at Stardust Power’s option to Usha. In the end, Usha would retain 10% of the project and a 2% NSR and would participate in the joint venture (“JV”) formed between Usha and Stardust Power until a formal decision to mine is made following completion of a feasibility study. Stardust would be entitled to buy back 1% of NSR for a cash consideration of US$7,500,000.

Deepak Varshney, CEO of Usha, commented: “We congratulate Stardust Power on its listing. With the recent acquisition of the Southern Arm Copper-Gold VMS project from Abitibi Metals, our focus will now shift to copper and other key metals. With working capital of approximately $1.2 million, Usha is in a strong financial position to manage the coming year and we look forward to our first drill program at Southern Arm, particularly at “Hollywood” which has ~1.8 km of acreage open along strike.”

Conclusion: While the letter of intent for the earn-in at Jackpot Lake is not binding, it speaks to Stardust’s seriousness that the company has already spent US$75,000 on the option alone. The Jackpot Lake project would fit Stardust’s profile perfectly. USHA’s Jackpot Lake lithium brine project is located in Clark County, 35 kilometers northeast of Las Vegas, Nevada, and covers approximately 35.3 km2. The geologic setting of the project is similar to that of Albemarle’s Silver Peak Nevada Lithium Mine, the only producing lithium mine in North America that has been in continuous operation since 1966. The modeling is open to expansion in all directions. The target lies at shallow depth, predominantly above bedrock at a depth of 600 meters, and is approximately 450 meters thick. A definitive agreement with Stardust could provide Usha Resources with significant additional revenue over the coming years – without dilution!