Rodinia Lithium raises $4.5 mln from potash stream financing

Rodinia Lithium (CVE:RM)(OTCQX:RDNAF) Thursday closed its previously-announced potash stream financing with gross proceeds of $4.5 million.

Shares in the company were up 3.13 per cent to 16.5 cents as at 12:35 pm EDT.

Earlier this month, Rodinia announced its plans to boost the size of its potash stream financing to 4.5 million subscription receipts at $1.00 each, on a non-brokered private placement basis. The prior proposed financing was for 3.0 million subscription receipts, for proceeds of $3.0 million.

Each subscription receipt is exchangeable into a unit consisting of one non-voting potash stream preferred share and one half of a common share purchase warrant.

Each whole warrant will allow the holder to acquire one common share of the company at a price of 45 cents for a period of 18 months following the closing date of the offering.

Holders of the potash stream preferred shares will be entitled to receive a cumulative, preferential cash dividend linked to the potash price and the revenue generated by the company from its Salar de Diablillos project, located in Salta Province, Argentina.

"This financing enables the company to continue development of its flagship Diablillos lithium-potash deposit and sets us on our path to completion of a feasibility study and what we believe will be the eventual production of lithium and potassium products from the salar," Rodinia Lithium's president and CEO William Randall said.

Randall added that the closing of the financing is a "significant corporate achievement" in light of the current challenges in the capital markets.

"Based on the pricing of the preferred shares, the implied valuation for our potash stream is $20 million, which exceeds Rodinia's current market capitalization and places no value on our significant lithium production potential," said Randall.

"Our challenge moving forward is to continue to advance this asset to production while correcting the company's underlying valuation."

Rodinia's deal will avoid share dilution with the company monetizing the by-product potash that is being extracted from its lithium assets.

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 per cent, 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 of potash sold.

Closing of the offering will be subject to obtaining the required 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. The company is also exploring the commercialization of a significant potash co-product that is expected to be recoverable through the lithium harvesting process.
Rodinia's Salar de Diablillos lithium-brine project contains a recoverable resource of 2.82 million tonnes lithium carbonate equivalent and 11.27 million tonnes potassium chloride equivalent.

In May, the company said it had successfully harvested sylvinite at its Diablillos project. Sylvinite, a potash and sodium chloride, was harvested during operation of its pilot engineering program being conducted on site.

The company also holds 100 per cent mineral rights to approximately 70,000 acres in Nevada's lithium-rich Clayton Valley in Esmeralda County.

The Clayton Valley project is located in the only known lithium-brine bearing salt lake in North America, and looks to represent the only new source for domestic lithium carbonate supply.