Western Lithium Canada Corporation and Rocky Mountain Resources Corp. have entered into a non-binding letter of intent pursuant to which Western Lithium proposes to acquire all of the outstanding shares of Rocky Mountain.
Rocky Mountain’s primary asset is the Gibellini development stage vanadium project in Nevada. Vanadium has the potential to become an important element for future battery chemistries together with lithium-ion chemistries. The companies believe that a combination of Nevada based strategic metals for applications in electrical storage and other industrial uses will provide operational and corporate synergies, and accretive value to shareholders.
Rocky Mountain’s Board of Directors have approved the proposed merger and upon entering into a definitive agreement will enter into specific support agreements agreeing to vote their shares in favour of the merger.
Completion of the transaction is conditional upon satisfactory completion of due diligence, the negotiation and execution of a definitive agreement and receipt of Rocky Mountain shareholder approval as well as other customary conditions and regulatory approvals. The special shareholder meeting of Rocky Mountain to vote on the transaction is expected to be held in early January 2010. An information circular and other related documents containing the terms of the Arrangement will be mailed to Rocky Mountain shareholders in late November. The transaction is expected to close in January 2010.
Western Lithium is developing the Kings Valley, Nevada lithium deposit into potentially one of the world’s largest strategic, scalable and reliable sources (based on a National Instrument 43-101 resource estimate) of high quality lithium carbonate. Western Lithium is positioning itself as a major US-based supplier to support the rising global demand for lithium carbonate that is expected from the increased use of mobile electronics and hybrid/electric vehicles.
At closing, all Rocky Mountain common shares will be automatically exchanged for Western Lithium shares on the basis of 0.4032 Western Lithium shares for each Rocky Mountain share. All warrants of Rocky Mountain will be exchanged for similar warrants of Western Lithium, based on the same exchange ratio. The consideration to Rocky Mountain shareholders pursuant to the Arrangement represents approximately, a 43% premium over Rocky Mountain’s closing price on 22 October 2009, based on Western Lithium’s 20 day weighted average share price on the TSX-V of $1.24 per share. The total number of shares Western Lithium would issue under the transaction is approximately 6,749,091.