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Vancouver Lithium Company Merging And Going Into Production

October 26th, 2010

The market dynamics for lithium are positive. Lithium demand has grown consistently over the past decade and is expected to accelerate significantly in the near term from increased consumption of lithium batteries, which are a critical component of hybrid and electric vehicles.

The board of directors of both Talison and Salares unanimously support the proposed transaction. Salares management and directors (together representing 7.43% of Salares shares on a fully diluted basis) have agreed to enter into lock-up agreements to support the transaction.

Merger Proposal
Under the terms of the proposed transaction, which is to be structured as a plan of arrangement (“Plan of Arrangement”) under the British Columbia Business Corporations Act, it is anticipated that common shares of Salares will be exchanged for ordinary shares of Talison¹ on the basis of 2.81 Salares shares for one Talison share. All outstanding options and warrants of Salares will be assumed by Talison, and exercisable in accordance with their terms for Talison shares.

Upon completion of the Plan of Arrangement, existing Salares and Talison shareholders will own 20% and 80%, respectively, of the combined company (on a fully diluted basis), prior to the conversion of the Subscription Receipts issued under the CAD$40 million Private Placement (as described below).
Vancouver’s Salares Lithium merging with Australian firm for world’s first pure-stock metal play

Talison Minerals and B.C. company hold properties in South America

VANCOUVER – One of the world’s top producers of lithium is betting its future on a Vancouver-based junior mining company.Australia’s Talison Minerals is merging with Salares Lithium Market, a junior with a handful of large properties in South America, to create the world’s first and only pure stock play on a metal that is considered a key component in the development of batteries for electric vehicles as well as other green energy applications.

The merger will combine Talison’s world class lithium minerals production in Australia with Salares’ prospective, large scale lithium brines exploration project in Chile. Upon completion of the proposed transaction, the combined entity will be well-funded, allowing for immediate expansion of the producing Australian operations to run in parallel with an accelerated exploration program at the Salares brine projects.

The merger will enable Talison, a private company with about 250 customers in China, to expand production to serve a market that’s expected to grow at least six per cent per year for the next decade.Total global production of lithium carbonate is about 100,000 to 150,000 tonnes per year, at contract prices ranging from $5,000 to $6,500 per tonne.

Salares’ Chairman David Shaw said today: “The merger of Salares with Talison will create a unique lithium company with exposure to both lithium minerals and lithium brines, building on the strong foundation of both companies to continue growing and delivering value for shareholders.”

Talison Chairman Peter Robinson stated: “Talison is already the largest lithium producer in the world and the largest supplier of lithium concentrates into the growing Chinese market. The merger with Salares will offer shareholders exposure to substantial growth opportunities for the potential production of lithium carbonate from lithium brines as well as from lithium minerals, to satisfy the demand for lithium products destined for the global electric vehicle market.”

Notably, on Tuesday, four days after the Talison-Salares deal was announced, Global X Lithium management announced in New York that it is creating the world’s first lithium exchange traded fund, or ETF.“Lithium itself is not scarce, it’s not rare — but economic deposits are,” Salares chief executive officer Todd Hilditch said Wednesday in a telephone interview.“Give or take, about 70 per cent of the world’s lithium comes from brine, or salt lakes. The remainder would be from hard rock.“Talison has been producing lithium for 25 years. They’ve got an excellent high-grade deposit, a low-cost producer in Australia and they’ve been shipping to China, almost exclusively all of their product. …

The market dynamics for lithium are positive. Lithium demand has grown consistently over the past decade and is expected to accelerate significantly in the near term from increased consumption of lithium batteries, which are a critical component of hybrid and electric vehicles.

The board of directors of both Talison and Salares unanimously support the proposed transaction. Salares management and directors (together representing 7.43% of Salares shares on a fully diluted basis) have agreed to enter into lock-up agreements to support the transaction.

Merger Proposal
Under the terms of the proposed transaction, which is to be structured as a plan of arrangement (“Plan of Arrangement”) under the British Columbia Business Corporations Act, it is anticipated that common shares of Salares will be exchanged for ordinary shares of Talison¹ on the basis of 2.81 Salares shares for one Talison share. All outstanding options and warrants of Salares will be assumed by Talison, and exercisable in accordance with their terms for Talison shares.

Upon completion of the Plan of Arrangement, existing Salares and Talison shareholders will own 20% and 80%, respectively, of the combined company (on a fully diluted basis), prior to the conversion of the Subscription Receipts issued under the CAD$40 million Private Placement (as described below).

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Vancouver Lithium Company Merging And Going Into Production