Rodinia Lithium unveils $3 mln non-dilutive potash stream financing

Rodinia Lithium (CVE:RM)(OTCQX:RDNAF) said late Monday that it will issue 3 million subscription receipts to an investor at $1.00 each, in a $3 million non-brokered private placement financing linked to potash price and future potash by-product sales.

The capital raised will go towards building a pilot plant and completing a feasibility study for the company's flagship Salar de Diablillos project located in Salta Province, Argentina.

"The unique structure of this offering recognizes the value inherent in our potash by-product, while at the same time providing us an opportunity to raise capital in a manner that is non-dilutive to the common shareholders of the company," Rodinia's president and CEO Will Randall said.

"While this financing places a current value on the potash by-product of C$20 million, Rodinia’s primary source of income in the event of production remains the sale of high purity lithium carbonate from Diablillos."

Each of the subscription receipts will be exchangeable into a unit consisting of one non-voting potash stream preferred share and one-half of a common share purchase warrant.

Holders of potash stream preferred shares will be entitled to receive a cumulative, preferential cash dividend linked to the price of potash and to the revenue generated by the company from its potash by-product sales from Salar de Diablillos.

Each whole warrant will entitle the holder to acquire one common share of the company at a price of $0.45 for a period of 18 months following the closing date of the offering.

Salar de Diablillos contains a recoverable resource of 2.82 million tonnes lithium carbonate equivalent and 11.27 million tonnes potassium chloride equivalent.

The project contains a recoverable inferred resource of 952 million cubic metres grading 556 milligrams per litre lithium and 6,206 milligrams per litre potassium.

In 2012, Rodinia will focus on continuing to develop the Diablillos project by completing additional drilling and advancing it through to feasibility study.

An updated mineral resource estimate is due for release in the second or third quarter, the company said recently, as its lithium project advances.

Initially, each potash stream preferred share will provide for an annual cumulative preferential cash dividend at a floating per share rate over the issue price of nine percent plus a potash price adjustment, payable annually on the last day of January following the relevant completed fiscal year.

Thereafter, the dividend rate will be reset so that holders will be entitled to receive quarterly dividends in an amount equal to the total amount of net potash revenue generated from the project for that quarter divided by 20 million - the maximum number of preferred shares that will be authorized in the capital of the company.

Net potash revenue will be calculated based on the quantity of potash sold and the potash sales price realized, less a potash production cost of $185.00 per tonne.

Closing of this offering is subject to TSX Venture Exchange approval.

Rodinia Lithium is a Canadian mineral exploration and development company with a primary focus on lithium exploration and development in North and South America.