Lithium Energy Secures US$26M in First Tranche of Solaroz Project Sale

Strategic Sale Progresses with First Major Payment

Lithium Energy Limited (ASX:LEL) has announced the receipt of US$26 million in cash following the completion of Tranche 1 of its staged sale of the Solaroz Lithium Brine Project interest in Argentina. This milestone payment forms part of a broader US$63 million (~A$97 million) agreement with CNGR Netherlands New Energy Technology B.V. (CNNET), a subsidiary of CNGR Advanced Material Co. Ltd.

The first tranche involved the transfer of Lithium Energy’s 39.9% shareholding in Solaroz S.A., the entity owning the Solaroz Project, alongside the assignment of a US$12 million loan owed by Solaroz to Lithium Energy. Including previous deposits totaling US$7.8 million, the company has now received a total of US$33.8 million (~A$52 million) related to this initial phase.

Ownership and Governance Post-Tranche 1

Following the transaction, Lithium Energy retains a 50.1% stake in Solaroz, maintaining board control with two nominees holding the President and Vice-President roles, including a casting vote held by the President. CNNET gains two board nominees, reflecting their growing influence as the transaction progresses.

Looking Ahead: Tranche 2 and Contingent Payments

The second tranche, scheduled for completion on 9 January 2026, will see the transfer of the remaining 50.1% shareholding and the balance of the outstanding loan amount. This phase will trigger a payment of US$21.7 million (~A$33.4 million) from CNNET.

Additionally, a US$3 million escrow account will be established to secure Lithium Energy’s performance under the sale agreement, held jointly for one year before release. There is also a deferred consideration component of US$4.5 million, payable if the benchmark lithium carbonate price exceeds US$23,000 per tonne averaged over any four-month period between the completion of Tranche 1 and 12 months after Tranche 2.

Market and Strategic Implications

This staged sale represents a significant capital inflow for Lithium Energy, enhancing its balance sheet and providing liquidity to potentially fund other strategic initiatives or operational needs. The structure of the deal, with deferred payments tied to lithium price benchmarks, aligns both parties’ interests with market performance, reflecting confidence in the lithium sector’s outlook.

However, the contingent nature of some payments introduces an element of price risk, underscoring the importance of lithium market dynamics in the coming months. Investors will be watching closely for lithium price trends and the company’s execution of remaining sale conditions.