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Provides Funds to Materially Advance the Kindersley Lithium Project
Conference call and webcast to be held at 10:00am (MST) on January 17, 2024 to describe the transaction
CALGARY, AB, Jan. 16, 2024 /PRNewswire/ - (TSXV:GRD) (OTCQB:GRDAF) – Grounded Lithium Corp. ("GLC" or the "Company") is pleased to announce we entered into a definitive agreement dated January 15, 2024 with Denison Mines Corp (TSX:DML, NYSE:DNN) ("Denison") whereby Denison has the option to earn up to a 75% working interest in the Kindersley Lithium Project ("KLP") by funding in aggregate up to $15,150,000 comprised of both cash payments to GLC of up to $3,150,000 and funding project expenditures of up to $12,000,000 through a structured earn-in option. (the "Agreement").
The Agreement is expected to provide more than sufficient funding for a field pilot (the "Pilot") for the KLP which both the Company and Denison (collectively, the "Parties") plan to advance on a priority basis. Beyond the Pilot, Denison may also provide further capital during the earn-in period to fund other activities as necessary to drive the overall KLP value such as further technical evaluations and studies, drilling, sampling and expenditures to maintain the KLP lands in good standing.
The Agreement highlights are as follows:
| (all amounts in CAD$000's) | Earn-in Option Phase | |||
| Phase 1 | Phase 2 | Phase 3 | ||
| Royalty Financing Payment | 800 | |||
| Cash Payments to GLC | - | 850 | 1,500 | |
| Cumulative Cash Payments | 800 | 1,650 | 3,150 | |
| Project Expenditures | 2,200 | 3,800 | 6,000 | |
| Cumulative Project Expenditures | 2,200 | 6,000 | 12,000 | |
| Total Contributions per Option Phase | 3,000 | 4,650 | 7,500 | |
| Cumulative Total Contributions | 3,000 | 7,650 | 15,150 | |
| Denison Working Interest in the KLP | 30 % | 55 % | 75 % | |
The Company also sold a 5% gross overriding royalty ("GORR") on the KLP to Denison in accordance with the terms of a royalty agreement (the "Royalty Agreement") for a cash payment of $800,000. Pursuant to the terms of the Royalty Agreement, the GORR drops to 2% upon the receipt of all approvals, inclusive of GLC shareholder approval of the Agreement. The GORR is eliminated in its entirety on the date that is fifteen (15) months after the closing of the Earn-In Agreement unless Denison elects to forfeit its rights to exercise an Earn-In Option.
GLC and Denison have established an area of mutual interest in respect of any lands acquired within 10 kilometers of any existing lands contained within the KLP that are prospective for lithium ("AMI Lands"). GLC is free to explore for, acquire and develop lands outside of the AMI Lands for its own account and we currently have developed several prospects which honour our geological model for economic lithium resource plays, while we benefit from intellectual knowledge gained from the technical work on the KLP.
"Grounded remains steadfast in our vision to economically produce battery grade lithium with a focus on low-cost operations and this strategic investment from Denison is a major step in that regard," stated Gregg Smith, President & CEO. "Denison has a considerable operating footprint in Saskatchewan as well as an excellent reputation within the Province, and we continue to be impressed with the diligence and professionalism of the Denison team. We look forward to working together to unlock the full value potential of the KLP for the benefit of our respective shareholders. Further, the strategic investment from Denison in both GLC and the KLP eliminates many perceived or distinct risks in our anticipated path to commercial production."
David Cates, President and CEO of Denison commented, "Denison is excited to acquire a royalty and enter into an earn-in agreement with GLC that supports the further assessment of the KLP in Saskatchewan. Denison has developed a unique platform for the de-risking of mine development projects in the Province with its innovative and highly skilled Saskatoon-based technical, regulatory, and operations teams. Lithium is a complementary mineral to Denison's core uranium business, with both identified as critical minerals needed to support the clean energy transition. Brine extraction also has many similarities to the In-Situ Recovery mining method that the Company has successfully validated for use at its flagship Wheeler River uranium project in northern Saskatchewan. Combining our deep local technical capabilities with the Grounded team's experience on KLP has the potential to create an incredible environment to incubate the KLP to emerge as a premier lithium project in a top mining jurisdiction."
"The transaction with Denison is a great outcome for both parties," commented Greg Phaneuf, Senior Vice President Corporate Development & CFO. "Denison gains exposure to a high-potential lithium brine project in Saskatchewan with similarities to its impressive uranium project development portfolio in the Province while Grounded receives immediate funding and partners with a strategic investor with a much lower cost of capital to advance the KLP without incurring dilution at the corporate level."
The Agreement is subject to the regulatory approval of the TSX Venture Exchange and is subject to receipt of shareholder approval by way of the written consent of shareholders holding over 50% of the current issued and outstanding shares of the Company.
