Stardust pays US$75,000 for exclusivity

Canadian lithium explorer Usha Resources (TSXV: USHA) (OTCQB: USHAF; FSE: JO0) is selling 90% of its Jackpot Lake lithium brine project in Nevada to U.S. public company Stardust Power Inc. The total value of the five-year earn-in deal, including shares and cash payments, is US$26.02 million. In an as yet non-binding letter of intent, Stardust has undertaken to invest US$ 8 million in the project over a period of five years. A further US$18 million in payments are due in the form of cash and shares. Usha would ultimately retain a 10 percent stake in the project. In addition, there would be a two percent royalty, which can be reduced to 1% for a one-off payment of US$ 7.5 million. Usha and Stardust now intend to conclude a definitive purchase and sale agreement in the second quarter of 2024.

Usha’s Jackpot Lake lithium brine project is located in Clark County, 35 kilometers northeast of Las Vegas, Nevada, and covers a total area of 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.

Stardust Power is developing a strategically located lithium refinery in the greater Tulsa, Oklahoma area capable of producing up to 50,000 tons of battery grade lithium per year. Stardust expects to receive up to $257 million in federal and state economic incentives to develop the facility, in addition to other federal grants and incentives from the Department of Energy and the Department of Defense. Stardust is utilizing direct lithium extraction (DLE) technology and plans to build a refinery facility designed for low emissions.

Stardust is expected to become a publicly traded company on the Nasdaq under the ticker symbol “SDST” through a proposed business combination with Global Partner Acquisition Company II (NASDAQ:GPAC). The implied pro forma enterprise value of the combined company is expected to be USD 490 million. The transaction is expected to close in the first half of 2024.

Deepak Varshney, CEO of Usha, commented: “We are very excited to partner with Stardust Power on Jackpot Lake. We believe in their vision and that they are the right team to advance Jackpot Lake and develop it into one of the premier lithium brine assets in the Americas. CEO Roshan and his team are developing a world-class company and we look forward to working with them in the years to come.”

Conclusion: It is clear that awareness of the importance of secure supply chains of critical raw materials has arrived in American politics. Stardust is planning to invest more than one billion US dollars in its new lithium refinery in Oklahoma and can count on generous government support. It is only logical that Stardust is also gaining access to a promising lithium brine project such as Jackpot Lake in Nevada – and Stardust has paid a non-refundable sum of US$75,000 to Usha pursuant to the deal just so Usha does not talk to anyone else until September. After all, the new refinery must be reliably supplied with raw material. Stardust pursues a holistic approach and relies on direct lithium extraction (DLE) technology, which has the smallest environmental footprint. DLE technology was already favored by Usha for its Jackpot Lake project. With Stardust, however, a financial heavyweight is now coming on board, which significantly improves Jackpot’s chances of success. In the end, from Usha’s point of view, it is always better to hold 10 percent of a major project with a completed feasibility study than 100 percent of something for which its own financial resources are insufficient. The royalty for Jackpot could be worth a lot of money in a few years’ time. The junior partner Usha negotiated well. But Stardust also got a fair deal, as it is buying one of the most promising lithium brine projects in the USA for US$ 26 million.

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According to §34b WpHG and § 48f Abs. 5 BörseG (Austria) we would like to point out that GOLDINVEST Consulting GmbH and/or partners, principals or employees of GOLDINVEST Consulting GmbH hold shares of Usha Resources and therefore a conflict of interest exists. GOLDINVEST Consulting GmbH also reserves the right to buy or sell shares of the company at any time. Furthermore, there is a contractual relationship between Usha Resources and GOLDINVEST Consulting GmbH, which includes that GOLDINVEST Consulting GmbH reports about Usha Resources. This is another clear conflict of interest.

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