Lithium Energy Secures US$6 Million Deposit, Advances Solaroz Sale
Lithium Energy Limited has received a US$6 million second deposit from CNGR Netherlands, marking a key milestone in the US$63 million sale of its Solaroz Lithium Brine Project. Shareholder approval has made the amended sale agreement unconditional, setting the stage for phased completion in 2025 and 2026.
- US$6 million second deposit received from CNGR Netherlands
- Shareholders approve amended sale agreement with ~96% support
- Total sale price of US$63 million remains unchanged
- Sale completion split into two tranches: April 2025 and January 2026
- CNGR commits up to US$15 million loan for Solaroz project development
Sale Progress and Shareholder Backing
Lithium Energy Limited (ASX:LEL) has announced the receipt of a US$6 million second deposit from CNGR Netherlands New Energy Technology B.V., a subsidiary of CNGR Advanced Material Co. Ltd. This payment follows the overwhelming shareholder approval of the amended sale agreement for Lithium Energy's 90% interest in the Solaroz Lithium Brine Project in Argentina. With approximately 96% of votes cast in favour at the general meeting held on 15 January 2025, the sale agreement has now become unconditional.
Details of the Amended Sale Agreement
The original sale agreement, struck in April 2024, set the total purchase price at US$63 million (approximately A$97 million). The amended agreement, formalised in December 2024 and effective from January 2025, maintains this valuation but restructures the transaction into two completion tranches. The first tranche, scheduled for 24 April 2025, involves the transfer of a 39.9% stake in Solaroz and the assignment of a US$12 million loan. The second tranche, expected by 9 January 2026, will transfer the remaining 50.1% shareholding and the balance of the loan.
Financial and Operational Implications
Alongside the deposits, CNGR has committed up to US$15 million in loans to fund further exploration and development activities at Solaroz starting 1 January 2025. Planned work includes additional drilling to enhance resource confidence, hydrological studies, and metallurgical test work, all contingent on updated Environmental Impact Assessment approvals. This financial backing underscores CNGR's strategic interest in advancing the project within the lithium-rich Salar de Olaroz Basin.
Governance and Future Steps
Following tranche one completion, CNGR will gain representation on the Solaroz board, though Lithium Energy will retain majority control until the second tranche concludes. The sale structure includes an escrow arrangement of US$3 million to secure Lithium Energy's performance, with potential deferred consideration of US$4.5 million linked to lithium carbonate price benchmarks.
Strategic Outlook
With the Solaroz sale progressing, Lithium Energy is poised to focus on its graphite assets and the upcoming Axon Graphite IPO, signalling a strategic pivot towards battery anode materials. The phased sale and associated funding commitments provide a clear pathway for project advancement while mitigating execution risks.
Bottom Line?
As Lithium Energy moves toward tranche completions, market watchers will keenly observe project development and the broader lithium price environment shaping deferred payments.
Questions in the middle?
- How will the phased sale impact Lithium Energy’s cash flow and operational focus in 2025?
- What are the risks if Environmental Impact Assessment approvals face delays?
- How might fluctuations in lithium carbonate prices affect the deferred consideration payment?
