Li3 Energy, Inc. (LIEG.OB) Signs Letter of Intent and Begins Application Process for TSX

By @ibtimes on

Li3 Energy’s stock chart has hit the radar of many technical traders due to its “inverted head and shoulders” pattern. The stock’s recent rise has brought the share price right against a resistance level just shy of 50 cents with the stock price closing on Monday at $0.455. News was released by the Company early this morning may help the stock break through the resistance.

The developmental Lima, Peru-based company announced the signing of a binding agreement with Sociedades Legales de Minerales de LITIO 1 a 6 de la Sierra Hoyada de Maricunga, a group of private companies (the “Companies”) to acquire a 60% ownership in the Companies, which collectively own the Maricunga Project in northern Chile. This new agreement is an extension of a previous non-binding letter of intent which was set to expire on February 28th, but will now incorporate this binding agreement and extend the offer for an additional thirty days. As standard issue, the agreement is subject to financing and other customary conditions.

Per the agreement, Li3 will pay $6 million and issue shares of LIEG to the companies involved that will total 30 percent of all the outstanding Li3 stock on a post-transaction basis. In addition, Li3 will issue additional shares upon exercise of any options and warrants outstanding at the time of closing, in proportion to the sellers’ percentage ownership as of closing as well as being committed to invest a total of up to $5 million in work programs on exploration and studies to advance Maricunga towards the feasibility study stage.

Li3 also has the intention of joining the resource-heavy Canadian markets and stated in their press release that they have begun the application process to be listed on the Toronto Stock Exchange.

The question of whether the share price will push through resistance may be answered today as investors digest this latest batch of information. The news of fresh shares hitting the market is seldom perceived on a positive note, but given the fact that the funding is being used to progress the Company’s business plans may help offset the news of dilution. The future share price will let us know how the investment community voted on this acquisition and news of application for listing on the TSX.

More information on Li3 Energy and its business strategies can be found on the Company’s website at www.li3energy.com

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