Neo Lithium takeover poses no security risk: Ottawa

Neo Lithium Corp. [NLC-TSXV, NTTHF-OTC] has announced the closing of a plan of arrangement with Zijin Mining Group Co. Ltd.

The move comes after Federal Industry Minister Francois-Philippe Champagne defended the decision to allow the Canadian company to be acquired by Chinese state-owned Zijin Mining without a formal security review.

“This transaction was absolutely reviewed to make sure there was no security risk,” Champagne said.

Under the arrangement, Zijin acquired all of the issued and outstanding common shares of Neo Lithium for $6.50 a share in cash.

On January 25, 2022, Neo Lithium shares closed at $6.43 on volume of 374,060. The shares currently trade in a 52-week range of $6.45 and $1.92.

Prior to the takeover, Neo Lithium was working to establish itself as a key player in the global battery metals sector by developing one of the world’s largest lithium brine projects Argentina.

Neo Lithium’s 100%-owned Tres Quebradas (3Q) Project is a unique high-grade lithium brine lake and salar complex, situated in Catamarca, a region known as Latin America’s “Lithium Triangle.”

It is estimated to contain enough reserves to produce battery-grade lithium for 50 years.

A key feature of the project is an unusually low level of impurities that should allow Neo Lithium to develop a project that will rank much lower on the cost curve than other comparable operations.

Lithium is a soft white metal that is used in the production of heat-resistant glass and ceramics, lithium grease lubricants, iron, steel and aluminum. It is also a key ingredient in the production of lithium-ion batteries, which are used in small electronic devices, including smart phones, laptops, and electric vehicles.

The Toronto-based company is developing the 3Q project amid reports that demand for the vehicle battery metal will likely triple over the next five years as automakers shift their focus away from internal combustion engines to electric vehicles.

It is a project which has already attracted the attention of Contemporary Amperex Technology Co Ltd. (CATL), a Chinese company which supplies lithium-ion phosphate batteries to electric car maker Tesla Motors Ltd. [TSLA-NASDAQ]. CATL is also supplying different types of batteries to various other carmakers including Daimler AG, and Toyota Motor Corp.

CATL emerged as Neo Lithium’s third largest shareholder with an 8.0% equity stake after acquiring more than 10 million shares at 84 cents each, raising Neo Lithium’s cash position to $37 million.

Brines (in salt ponds) and spodumene (hard rock) represent the two main sources of commercial lithium production. The largest known deposits are found in South America.

In Neo’s case, it is taking lithium from sediment that is trapped in salars, or salt flats.

In an interview, Neo CEO Waldo Perez predicted that 3Q would ultimately cost about $500 million to develop.