At a time of rapidly growing lithium demand backed by an increasing focus on electric vehicles, energy storage and renewable energy generation, American Lithium (TSXV: LI; US-OTC: LIACF) has entered a definitive agreement to acquire Plateau Energy Metals Inc. (TSXV: PLU; US-OTC: PLUUF) to consolidate two "significant and strategic" undeveloped lithium assets in the Americas.
The acquisition would establish American Lithium as a consolidator of development assets in the Americas, the company said, and would "substantially increase its resource base" by combining its TLC project in Nevada and Plateau's Falchani project in Peru.
American Lithium also plans to implement a strategic approach to Plateau's uranium assets, specifically Macusani, believed to be the largest known uranium deposit in Peru.
"We are very pleased to be able to add Plateau and its assets to the American Lithium platform," Michael Kobler, American Lithium's CEO, said in a news release. "We believe that Falchani offers geographic and geological diversity in one of the leading mining jurisdictions in South America and one of the strongest emerging markets globally."
Under the terms of the agreement, American Lithium will acquire all the issued and outstanding common shares of Plateau on the basis of 0.29 units for each share of Plateau held. Each unit will consist of one American Lithium common share plus one-half of a common share purchase warrant. Each whole warrant will entitle the holder to acquire one additional common share of American Lithium at an exercise price of $3.00 for a period of 36 months from the date of completion.
The arrangement represents a 72% premium to Plateau shareholders using the trailing 20-day volume weighted average trading price on the TSX Venture Exchange of each company as of market close on February 5.
It is expected that Plateau shareholders will hold approximately 21% of American Lithium's shares on an outstanding undiluted basis once the transaction is completed.
"This transaction represents a significant premium for our shareholders and allows us to gain exposure to an asset portfolio in Nevada, a successful team, and a larger public company platform possessing access to capital and excellent trading liquidity," Laurence Stefan, Plateau's chief operating officer, stated in the news release. "Certain members of Plateau's team and board will continue on with the newly diversified company to provide for continuity."
At presstime in Toronto, American Lithium was trading at $3.95 per share within a 52-week range of 13.5 ? and $4.21. The company has about 120 million common shares outstanding for a market cap of about $475 million.
Shares of Plateau Energy Metals were trading at 90 ? within a one-year range of 16 ? and 98 ?. The company has about 105 million common shares outstanding for a market cap of about $94 million.