Lithium Australia (ASX: LIT) will start the new year with a lot more cash in its reserves after Lind Partners’ subsidiary The Lind Global Macro Fund agreed to invest up to $6.3 million in the entity.
Under the deal, Lind will make an initial $3 million investment which will fund Lithium Australia’s strategy to grow the Soluna battery sales business, commercialisation plans for its VSPC cathode division, and expansion of its Envirostream Australia battery recycling business.
Lind managing director Jeff Easton said the company had been following Lithium Australia since 2013.
“In that time, we have seen Lithium Australia evolve from an explorer to a diversified battery and battery minerals company with three distinct complimentary business units with excellent commercial potential,” Mr Easton explained.
“We are thrilled to invest in Lithium Australia and its management team to support the strategic plan of expanding operations into a diversified battery company,” he added.
The agreement paves the way for Lithium Australia to draw up to $6.3 million in a number of tranches from Lind.
Additionally, the agreement terms allow Lithium Australia to continue to carry out further private placements of equity or financial transactions.
Lind will advance the funding to Lithium Australia in two parts.
In the first investment, Lithium Australia will issue Lind with a zero-interest redeemable secured convertible security with a $3.3 million face value, but an advance of $2.9 million.
The difference reflects financing charges associated with the facility and includes interest.
Lithium Australia has retained the right to buy back the convertible security at any time subject to Lind’s buy back conversion rights for up to 30% of the outstanding face value.
In the second part, Lind will subscribe up to $3.4 million worth of Lithium Australia shares over 12 months.
This part will work with Lind pre-paying each tranche at the start of each month. Lind will then be issued shares at the end of the month at the purchase price.
The purchase price will be the lower of $0.055 per share or 92.5% of the three-day volume weighted average price.
Commenting on the deal, Lithium Australia managing director Adrian Griffin said it would improve the company’s balance sheet and allow it to grow its business in ways that are environmentally responsible and sustainable.
“During 2019, Lithium Australia has made a significant transition towards what is a more diversified revenue producing business in one of the world’s fastest growing sectors – batteries and battery minerals,” he added.