Australia’s Jindalee Lithium (ASX:JLL,OTCQX:JNDAF) is spinning out its US asset portfolio into a newly formed company that will list on the Nasdaq via a US$571 million blank-check merger.
The new entity, called US Elemental, will merge with Constellation Acquisition (OTCID:CSTAF), a special purpose acquisition company (SPAC) sponsored by affiliates of Antarctica Capital, a New York-based investment firm with over US$10 billion in assets under management.
At the core of the transaction is the McDermitt lithium project in Oregon, widely considered one of the largest undeveloped lithium deposits in the US. US Elemental will also have the Clayton North project in Nevada.
The assets are currently held by HiTech Minerals, a wholly owned subsidiary of Jindalee.
“Establishing US Elemental as a US-listed company represents an important milestone in unlocking the value of our U.S. lithium assets,” Ian Rodger, CEO of Jindalee and incoming CEO of US Elemental, said in a statement.
“We believe the McDermitt project is one of the largest lithium resources in the United States, and this Transaction is expected to position the Company to access the capital and strategic partnerships needed to advance development.”
McDermitt boasts a resource of approximately 21.5 million metric tons of lithium carbonate equivalent.
According to a recently completed prefeasibility study, the asset is projected to support a 63 year mine life. During its first decade of operation, the site is planned to produce roughly 47,500 metric tons of lithium carbonate annually.
The McDermitt project economics outline an estimated US$3.2 billion net present value (at an 8 percent discount rate), as well as a 17.9 percent post-tax internal rate of return.
Despite spinning out the assets into a US-listed vehicle, Jindalee intends to retain tight control. The Australian parent company will roll 100 percent of its equity interest into the new entity, expecting to hold approximately 80 percent or more of US Elemental post-close, subject to customary adjustments and SPAC shareholder redemptions.
To fund the next phase of technical studies and permitting, the transaction contemplates a concurrent capital raise of US$20 million to US$30 million. This includes a US$4 million private investment in public equity anchored by affiliates of Antarctica Capital, alongside potential third-party investors.
Post-transaction, US Elemental is projected to hold roughly US$15 million in cash, net of deal expenses.
For Constellation and its sponsor, the merger capitalizes on the push to secure battery metals supply.
“We believe US Elemental offers investors exposure to a significant US lithium resource at an important time for the industry,” Chandra Patel, chair and CEO of Constellation and managing partner at Antarctica Capital, stated.
“Demand for battery materials continues to grow and there is increasing emphasis on developing domestic sources of supply. The McDermitt Project, combined with the team’s experience and the scale of the resource, creates a strong platform for long-term growth,” the executive added.
The deal is subject to regulatory and shareholder approvals, as well as a minimum cash condition of US$14 million.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Jindalee Lithium is a client of the Investing News Network. This article is not paid-for content.
