Latin circumvents cap increase with innovative $2.75 million loan deal


Latin Resources has pushed back its next fundraising round with an innovative $2.75 million loan from prolific New York-based small-cap fund manager Lind Partners. Latin will guarantee repayment of the loan over the next 10 months from funds raised from its existing options which are already well in the money with a 1.2c strike on December 22.

Lind will receive $325,000 in fees and 35 million out-of-the-money options with a strike price of 5c each on March 26 and Latin will avoid the need for a dilutive capital raise as it seeks to push through its exciting Brazilian lithium project to the next step.

Under the terms of the agreement, $2.5 million, less a “commitment fee” of $75,000, will be advanced to Latin, which will ultimately repay $2.75 million over the ten-month period as that the options will be converted by existing option holders.

Latin has around 429 million 1.2c options and could even raise up to $5 million if it gets a good conversion rate. The company says it expects much to be exercised by the end of the year.

According to Latin, the initial investment will provide capital for additional drilling at its Salinas Lithium project in Brazil, where a recent drilling campaign uncovered numerous spodumene pegmatites. The Company aims to increase the existing drilling program from 2,000 meters to 5,000 meters in order to push the project towards the estimation of a JORC mineral resource.

Latin will also use the funds to look further afield and begin finding drill targets on its additional lithium concessions in Brazil’s Salinas and Bananal Valley regions. Latin says it will begin applying for permits after its additional drill targets have been set and will seek to test them when completed.

This innovative financing facility provided by our financing partner, Lind, provides the company with the working capital needed to continue drilling the newly discovered spodumene pegmatites in our Brazilian portfolio without the need for an equity investment, thereby reducing dilution for existing shareholders. We expected to be able to add a lot of value very quickly in Brazil with these funds.

The company has good reason to expect to receive over $5 million in cash from the exercise of its LRSOC options, and this funding, backed by option money, is now accelerating our drilling program. This financing constitutes a profitable source of capital for the Company.

The famous Bananal Valley in southwestern Brazil is an important part of the Salinas de Latin lithium project. The project is located in the famous region of Minas Gerais, which also contains Sigma Lithium’s Grota do Cirilio project.

Sigma’s ground is about 60 kilometers away and has a high-grade lithium resource of about 52 million tons. The company is nearing production at Grota do Cirilio and expects to deliver product with an average grade of approximately 1.48% lithium oxide.

Lithium is hot right now and latin was probably a bit ahead of its time in having secured lithium soil when the lithium price was floundering – however it has no such problem now and with a reinvigorated war chest and a really interesting pitch, it will be interesting to see how far Latin can take his Brazilian project before they need the money again.

The company’s deal with Lind, however, appears to have saved it from any dilution for now at current low prices – and Lind has deep pockets and plenty of appetite for high-risk, high-reward ventures, which which could make him an ideal partner for Latin as he seeks his fortune in lithium in Brazil.

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