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Li3 Announces Closing of its Financing

Chilean entrepreneur becomes strategic partner and will fund the Maricunga project until all permits are obtained

SANTIAGO, Chile, Jan. 31, 2014 /PRNewswire/ -- Li3 Energy, Inc., (OTCBB: LIEG) ("Li3", "Li3 Energy" or the "Company"), a US-listed and South America based global exploration company in the lithium and minerals sector, is pleased to announce it has executed the financing (the "Transaction") with BBL SpA ("BBL"), raising $8million  for the advancement of the Maricunga Lithium/Potassium project (the "Project"), located in the Salar de Maricunga in Chile.  BBL is a Chilean Corporation with the objective to advance a business in the production of lithium.

BBL has acquired, by way of cash payment 51% of Minera Li Energy SpA ("Minera Li"), Li3´s Chilean subsidiary and holder of the properties denominated as Litio 1-6 and Cocina 19-27.  Li3 retains 49% ownership.  The main considerations of the transaction are as follows:

1. BBL made a contribution of $5.5mm into Minera Li.  The use of these funds is intended for:

  • Full and final payment of the Cocina 19-27 properties acquired by Li3 on April 16, 2013
  • Repayment of the $500k bridge loan made by BBL to Minera Li on November 4, 2013
  • Working capital of Minera Li

2. BBL made a cash payment of $1.5mm to Li3 to acquire a portion of its shares in Minera Li. Li3 will use these funds to pay current debt and working capital purposes

3. BBL and Li3 are fully committed to advance the Project to the stage of full permitting including environmental, social, and construction, and all studies related to the Project to international recognized standards (the "Project Milestone").  To this end, BBL has also committed to finance Li3´s share of the exploration expenses until the Project Milestone is achieved.  There are no specified limits to this financing and repayment will be due 24 months from the drawdown date and will be secured by Li3´s shares in Minera Li.

4. BBL has also committed to a $1mm payment to Li3 by the earlier of: completion of certain project milestones in the Maricunga Lithium/Potassium project (the "Project") or January 27, 2016.

5. Finally, BBL will provide Li3 with a line of credit of $1.8mm as of April 1, 2014 until March 31, 2015.  The credit facility allows Li3 to draw $100k during April 2014, and $200k per month thereafter, until the maximum $1.8mm is reached.  The credit facility is to cover Li3´s working capital as needed.  Repayment terms of each drawdown will be 12 months from the drawdown date.  The credit facility will be secured by Li3´s shares in Minera Li.

Patrick Cussen, Chairman of the Board of Li3 Energy stated, "Over the past year, the Board of Directors assessed various strategic and financing options.  We are very pleased to have partnered with BBL, a strong Chilean strategic partner, who shares our belief in the inherent value of Li3 and the potential of lithium projects in Chile.  As mentioned in November, although this transaction reduced our interest in our core assets, in the long term, we believe this transaction provides the best shareholder value and assures that Li3 will be fully funded through feasibility study and permitting.  This is no small achievement in today's difficult market environment.  Working with BBL as well as our main shareholder POSCO, the Maricunga lithium project now has a clear path for advancement. With the Maricunga project fully funded, management and the Board of Directors are in position to look for other projects and opportunities for Li3."

In addition to the above transaction, Li3 also announces the executed agreement (the "Additional Transaction") with Tierras Raras SpA ("Tierras Raras"), a Chilean corporation and affiliate to BBL, whereas:

  • Minera Li3 currently owns 60% of the shares of various companies that collectively own the rights to the Litio 1-6 properties.  The remaining 40% is owned by various shareholders unrelated to Li3.  Currently Li3 has pending litigation with these shareholders to claim approximately $2.3mm in unpaid contributions for the exploration and development of the Litio 1-6 properties.
  • Tierras Raras has agreed to acquire the above-mentioned 40% shareholding for an undisclosed consideration from the various shareholders.
  • Li3 has agreed to end all litigation against the owners of the above-mentioned 40% shareholding upon payment of $1.6mm as full and final settlement against our claims. 
  • Final execution of this agreement is subject to certain conditions.  This agreement is valid until March 27, 2014, after which it will be terminated.  In this case, BBL has separately agreed to certain remedies in favor of Li3.

About Li3 Energy, Inc.

Li3 Energy, Inc. is an exploration stage public company in the lithium mining and energy sector.  Li3 aims to acquire, develop and commercialize a significant portfolio of lithium brine deposits in the Americas.  With its controlling interest in its Maricunga Project, coupled with the completion of the NI 43–101 Compliant Measured Resource Report and the recently acquired Cocina acquisition, Li3's goals are to: a) advance Maricunga to the Feasibility Stage; b) support the global implementation of clean and green energy initiatives; c) meet growing lithium market demand; and d) become a mid-tier, low cost supplier of lithium, potassium nitrate, iodine and other strategic minerals, serving global clients in the energy, fertilizer and specialty chemical industries.  Additional information regarding the Company can be found in its recent filings with the Securities and Exchange Commission ("SEC") as well as the information maintained on our website www.li3energy.com

Forward-Looking Statements

Any statements contained herein which are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements identified by or containing words like "believes," "expects," "anticipates," "intends," "estimates," "projects," "potential," "target," "goal," "plans," "objective," "should", or similar expressions.  The Company gives no assurances the assumptions upon which such forward-looking statements are based will prove correct.  Forward-looking statements involve risks, uncertainties and assumptions, and are based on information currently available to us.  Actual results may differ materially from those expressed herein due to many factors, including, without limitation: obtaining the necessary funding required to satisfy the company's on-going operations; validation of the POSCO technology; obtaining and the issuance of necessary government consents; confirmation of initial exploration results;  the Company's ability to raise additional capital for exploration; development and commercialization of the Company's projects; future findings and economic assessment reports; the Company's ability to identify appropriate corporate acquisition or joint venture opportunities in the lithium mining sector and to establish appropriate technical and managerial infrastructure; political stability in countries in which we operate; and lithium prices.  For further information about risks faced by the Company, and its Maricunga Project, see the "Risk Factors" section of the Company's Form 10-K, filed with the SEC on October 9, 2013. The Company undertakes no obligation to update any forward-looking statement contained herein to reflect events or circumstances which arise after the date of this release.

Contact:
KCSA Strategic Communications
Julie Silber
Senior Vice President, Investor Relations
212-896-1225
[email protected]

SOURCE Li3 Energy, Inc.

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