VANCOUVER, BRITISH COLUMBIA–(Marketwired – May 18, 2016) –
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
North South Petroleum Corp. (the “Company” or “North South”) (NEX:NAS.H) is pleased to announce that the Company has entered into a binding letter of intent (“LOI“) dated May 12, 2016 with Lithium X Energy Corp. (TSX VENTURE:LIX) (“Lithium X“) whereby the Company will acquire an option (the “Option“) to earn a 50% interest in Lithium X’s wholly-owned CVL South Lithium Property (the “Property“) located in Nevada’s Clayton Valley.
In order to earn its interest, the Company must make staged cash payments, fund work program costs and issue common shares to Lithium X over a three year period. In the first 18 months, the Company is required to pay a non-refundable deposit of US $100,000, a cash payment on closing of US $1.5 million, fund work program costs of US $1 million and issue Lithium X sufficient common shares such that after completion of the financing referred to below, they will own 19.9% of the outstanding shares of the Company. In the second 18 months additional work program costs of US $ 1 million will be required. On completion of each earn in work program additional cash payments may be required. A finder’s fee of 500,000 common shares is payable.
The Company will complete a concurrent “part and parcel” financing of common shares at $0.25 per share to raise up to $4 million. Proceeds from the financing will be applied towards satisfying the requirements for exercising the Option and for working capital. There is no minimum amount of financing.
On closing Dev Randhawa will be appointed to the Board and will serve as Interim Chief Executive Officer. Dev Randhawa is an award-winning CEO specializing in the resource industry. He has founded and grown several successful junior resource companies, including Strathmore Minerals, Fission Energy and Fission Uranium. Mr. Randhawa has a strong track record of building the right team to develop assets and grow shareholder value. As a result of his success in the sector, The Northern Miner named him “Mining Person of the Year” in 2013, EY awarded him “Entrepreneur of the Year, finalist” in 2014 and, under his leadership, Fission Uranium won “Exploration Project of the Year” in 2015.
Dev Randhawa, commented, “As a strong believer in the long-term strength of the battery industry, I’m delighted to be joining the Board and serving as interim CEO. With Lithium demand growing, this is the ideal time to be building the right team and working as a joint venture partner of Lithium X, which not only has top tier management but also a highly strategic land package in Nevada — a world hot spot for Lithium.”
Dev Randhawa will join existing directors David Sidoo, Marc Cernovitch and Hon. Herb Dhaliwal on the Board. Existing director Craig Taylor intends to resign from the Board.
A further management change to be made on closing is the appointment of David Sidoo as President. David Sidoo commented: “We look forward to working with the management team, consultants and financial advisors of Lithium X to advance and develop the CVL South Property and also considering other potential collaborations. This deal is the first of many more deals we hope to announce in the near future.”
“The opportunity to partner with North South is a tremendous opportunity for both Companies,” stated Brian Paes-Braga, Lithium X President and CEO. “North South’s management team has direct experience developing mineral discoveries. We look forward to working together.”
On closing, Mr. Ross McElroy will be retained as a technical advisor and will serve on the Company’s technical committee. Ross McElroy is a professional geologist with nearly 30 years of experience in the mining industry. He is the winner of the PDAC 2014 Bill Dennis award for exploration success and the Northern Miner ‘Mining Person of the Year 2013’. He has comprehensive experience working with and managing many types of mineral projects from grass roots exploration to feasibility and production. Other members of the joint Nevada technical committee will be Marc Bustin, Paul Matysek, and William Randall. The Committee will meet a minimum of once quarterly.
The Company also proposes to change its name to Advantage Lithium Corp. which will more fully reflect its operations.
The CVL South Property consists of 471 federal placer mining claims totaling approximately 9,540 acres (3,861 hectares) which are located approximately 30 miles southwest of Tonopah, Nevada, in the Clayton Valley. The Property is strategically located between and contiguous with the Silver Peak lithium mine on the northern boundary, the Clayton Valley South project and the Neptune property to the west. Additional information regarding the Property will be disclosed upon receipt of a 43-101 report which is in process. No funds have been spent on the Property by Lithium X other than its acquisition costs.
The Company’s obligation to acquire the Option is subject to North South completing the $4,000,000 financing referred to above, completion of due diligence, and TSXV acceptance.
Closing of the acquisition of the Option shall occur on the later of May 31, 2016 and three weeks after receipt by the Company of a 43-101 report on the Property. The Company may extend this date by payment of a further deposit of US $ 75,000.
Upon the Company having earned its 50% interest in the Property, Lithium X and North South will form a joint venture for the joint ownership and further exploration and development of the Property. The parties agreed to diligently and in good faith negotiate and enter into a definitive joint venture agreement governing their joint ownership and further activities on the Property, containing industry standard terms and provisions as are customary in transactions of this nature, and otherwise incorporating the following terms:
- The Company will be the operator of the joint venture; and
- Initial interests under the joint venture shall be 50% Lithium X and 50% the Company.
Lithium X has agreed to vote all common shares of North South received by it pursuant to the LOI in favor of all resolutions proposed by management of North South at any general meeting of North South shareholders held in the year following the closing date.
Following the closing date, Lithium X shall have the right to participate in all equity financings completed by North South to the extent required to maintain its percentage equity interest in North South.
The parties will diligently and in good faith negotiate a definitive agreement to be executed by the parties by no later than the last day of the due diligence period incorporating the principal terms and conditions set out herein and such other terms and conditions as are customary in transactions of this nature and/or as may otherwise be agreed upon by the parties.
The Company was previously a CPC listed on the TSXV. It is currently listed on NEX. The transactions described above constitute the Company’s “Qualifying Transaction”. The transactions are not subject to TSXV Policy 5.9. The transactions described above are arm’s length transactions and are subject to TSXV acceptance. The Company intends to make application to move its listing from NEX to Tier 2 (Mining Issuer) of the TSXV upon completion of the transaction. The Company intends to seek a waiver from TSXV sponsorship requirements.
There is no material fact or material change about the Company that has not been generally disclosed.
NORTH SOUTH PETROLEUM CORP.
David Sidoo, Director
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
David Sidoo
Director
604-685-9316
604-683-1585 (FAX)