Usha Resources has signed an LOI with Stardust Power to sell up to 90% of its stake in the Jackpot Lake Lithium Project for a total consideration of up to $26.02m, alongside a 2% net smelter royalty (NSR).
The proposed transaction includes various financial components such as $1.52m in cash payments, $750,000 in stock and an option for Stardust Power to choose between stock or cash payments amounting to $15.75m.
Additionally, Stardust Power is expected to commit to an $8m work programme on the project.
If Stardust Power meets all the earn-in requirement, including the NSR buyback, Usha Resources would retain a 10% interest in the project and a 2% NSR.
The two companies would then form a joint venture, with Usha being carried until a decision to mine is made post-feasibility study. Stardust Power has the option to repurchase 1% of the NSR for $7.5m.
A non-refundable deposit of $75,000 has already been paid to Usha by Stardust Power as part of the LOI, which also restricts Usha from engaging with other potential buyers through September 2024.
However, the LOI is non-binding, and the deal's finalisation is contingent upon several conditions including due diligence, definitive agreements and TSX Venture Exchange approval.
Usha Resources has cautioned that the definitive agreement's completion is not guaranteed, nor is Stardust Power's listing on the Nasdaq.
Stardust Power is currently developing a lithium refinery in Muskogee, Oklahoma, aiming to produce up to 50,000 tonnes per annum of battery-grade lithium carbonate, primarily for the electric vehicle market.
The refinery's design focuses on low-carbon energy independence for the US and will be optimised for various lithium brine inputs.
Stardust Power plans to source multiple feedstocks, positioning the facility as one of the largest lithium refineries in the country.
Stardust Power's anticipated NASDAQ listing under the ticker "SDST" is part of a business combination with Global Partner Acquisition Corp II and is expected to be completed in the first half of 2024.
