Usha Resources Congratulates Stardust Power on NASDAQ Listing, Provides Update on LOI to Sell Up to 90% of the Jackpot Lake Project for Total Consideration of up to US$26,025,000

Rhea-AI Summary

Usha Resources (TSXV: USHA) (OTCQB: USHAF) congratulates Stardust Power on its NASDAQ listing, a important step for executing definitive agreements related to the Jackpot Lake Lithium Brine Project. Usha has granted Stardust Power the right to earn up to a 90% interest in the project for US$26,025,000 over five years. The deal includes cash payments, stock issuance, and work commitments. Upon completion, Usha would retain a 10% stake and a 2% NSR. Usha's CEO, Deepak Varshney, emphasized the company's focus shift towards copper and critical metals, highlighting their strong financial position with $1.2M in working capital. Stardust Power aims to develop a lithium refinery in Oklahoma, potentially producing up to 50,000 tons of battery-grade lithium carbonate annually.

Positive

• Potential to receive up to US$26,025,000 for 90% interest in Jackpot Lake project
• Retention of 10% stake and 2% NSR in the project after full earn-in
• Strong financial position with $1.2M in working capital
• Diversification into copper and critical metals with the Southern Arm Copper-Gold VMS Project acquisition

Negative

• Transaction is subject to due diligence and definitive agreement execution
• No guarantee of completion of the definitive agreement or satisfaction of conditions

Insights

Financial Analyst

This news, while seemingly significant, requires a cautious approach. The Letter of Intent (LOI) between Usha Resources and Stardust Power for the Jackpot Lake Lithium Brine Project is non-binding, with only a $75,000 non-refundable payment made so far. The total potential deal value of $26,025,000 over five years is substantial for Usha, but it's important to note that this is contingent on multiple factors.

The structure of the deal is complex, involving a mix of cash, stock and work commitments. If fully executed, it would leave Usha with a 10% stake and a 2% Net Smelter Royalty. However, the deal's completion is far from certain, hinging on due diligence, definitive agreement negotiation and regulatory approvals.

Usha's pivot towards copper and other critical metals, backed by a $1.2 million working capital, suggests a strategic shift. This diversification could be viewed positively, spreading risk across different commodities. However, it also raises questions about the company's focus and expertise in managing diverse projects.

Investors should approach this news with caution. While the potential upside is significant, the numerous conditions and the non-binding nature of the LOI mean that the deal's realization is far from guaranteed. The market's reaction to this news should be monitored closely in the coming days.

Mining Industry Expert

The Jackpot Lake Lithium Brine Project's geological setting, described as similar to Albemarle's Silver Peak Nevada Lithium Mine, is intriguing. Silver Peak has been in continuous operation since 1966, which speaks to the potential longevity of such projects. However, it's important to note that geological similarity doesn't guarantee similar resource quality or quantity.

The project's modelling indicates a shallow target, predominantly above 600 meters, with a thickness of about 450 meters. This is potentially favorable for extraction economics, as shallower resources generally require less capital-intensive mining methods. The total basin size of 10,900 acres, with Usha controlling 8,714 acres, suggests significant exploration potential.

However, investors should be aware that the project is still in early stages. No resource estimates or economic studies have been mentioned, which are important for determining the project's viability. The transition from exploration to a producing mine is a long, capital-intensive process with numerous technical and regulatory hurdles.

Stardust Power's plans for a lithium refinery in Oklahoma, while not directly related to Usha's assets, could potentially provide a strategic advantage if the Jackpot Lake project advances. However, this is speculative at this point and depends on many factors, including the success of both Stardust's refinery plans and Usha's exploration efforts.

Overall, while the geological setting appears promising, much more work is needed to determine the project's true potential and economic viability.

VANCOUVER, BC, July 26, 2024 /PRNewswire/ -- Usha Resources Ltd. ("USHA" or the "Company") (TSXV: USHA) (OTCQB: USHAF) (FSE: JO0), a North American exploration company, congratulates Stardust Power, Inc. ("Stardust Power", "SDST" and "SDSTW") on the completion of its business combination with Global Partner Acquisition Corp II and the listing of its shares of Class A common stock on the Nasdaq Global Market ("Nasdaq").

Usha entered into a Letter of Intent (the "LOI") with Stardust Power dated March 15, 2024 granting Stardust Power the right to earn up to a 90% interest subject to a 2% Net Smelter Royalty ("NSR") in Usha's Jackpot Lake Lithium Brine Project ("Jackpot Lake" or the "Project") for total consideration of US$26,025,000 over five years.

A non-refundable sum of US$75,000 has been paid to Usha by Stardust Power pursuant to the LOI.

Stardust Power's listing on the NASDAQ is a necessary condition for the execution of definitive agreements (the "Definitive Agreement") pursuant to the LOI.

Upon completion of the full earn-in of US$26,025,000, which comprises payments totaling US$1,525,000 cash, US$750,000 stock, US$15,750,000 stock or cash at Stardust Power's election, and a work commitment of US$8,000,000, Usha would retain 10% of the Project and a 2% NSR and would be carried in the Joint Venture ("JV") formed between Usha and Stardust Power until a formal Decision to Mine is reached following completion of a Feasibility Study. Stardust would be permitted to buy back 1% NSR for a cash payment of US$7,500,000. 

Deepak Varshney, CEO of Usha commented: "We congratulate Stardust Power on its listing and its subsequent success which demonstrates the strength of their value proposition."

Mr. Varshney continued: "Our strategic vision at Usha has always been to acquire and monetize undervalued assets. With the recent acquisition of the Southern Arm Copper-Gold VMS Project from Abitibi Metals, our focus will now shift towards copper and other critical metals. With working capital of approximately $1.2M, Usha is in a strong financial position to execute over the coming year and we look forward to our maiden drill program at Southern Arm, particularly at "Hollywood", which has a ~1.8 km footprint that is open along strike."

Stardust Power is developing a lithium refinery facility in Muskogee, Oklahoma, with capacity of producing up to 50,000 tons per annum of battery grade lithium carbonate ("BGLC") once fully operational. Stardust Power's battery-grade lithium refinery will be designed and manufactured to foster lower carbon energy independence for the United States. Stardust Power seeks to become a sustainable, cost-effective supplier of BGLC, primarily for the electric vehicle ("EV") market, through the development of its innovative, large central refinery (the "Facility") optimized for multiple inputs of different types of lithium brine, including concentrated lithium brine, lithium chloride, or technical and crude grade lithium feedstocks. Once completed, Stardust Power expects to secure multiple sources of feedstock from various lithium producers, with the Facility becoming one of the largest lithium refineries in the United States.

The LOI is non-binding, other than Usha's agreement to not engage or communicate with any other party with respect to the Project through September 2024. The transaction is subject to the satisfaction of a number of conditions, including Stardust Power's satisfactory commercial and legal due diligence, the negotiation and execution of the Definitive Agreement and the approval of the TSX Venture Exchange. The Company cautions that there is no guarantee that the Definitive Agreement will be completed or that the other conditions will be satisfied.

Jackpot Lake Lithium Brine Property

USHA's Jackpot Lake Lithium Brine Project is located within Clark County, 35 kilometers northeast of Las Vegas, Nevada, and is comprised of 442 optioned and staked mineral claims that total 8,714 acres (approximately 35.3 km²).

The Project's geologic setting is similar to that of Albemarle's Silver Peak Nevada Lithium Mine, the only producing lithium mine in North America, which has operated continuously since 1966, where sediments from lithium–rich surrounding source rocks accumulate and fill the deposit leading to a potential concentration of lithium brine due to successive evaporation and concentration events.

Modelling indicates that the Project target comprises the entirety of the Company's core optioned claim block (2,800 acres; 11.3 km²) and is open in all directions for expansion. The target is shallow, predominantly above bedrock depths of 600 meters, and is approximately 450 meters thick. The total basin within which the target is situated is estimated to be approximately 10,900 acres of which the Company now controls 8,714 acres.

Qualified Person

The technical content of this news release has been reviewed and approved by Mr. Deepak Varshney, P.Geo., a qualified person as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101").

About Usha Resources Ltd.

Usha Resources Ltd. is a North American mineral acquisition and exploration company focused on the development of quality lithium metal properties that are drill-ready with high-upside and expansion potential. Based in Vancouver, BC, Usha's portfolio of strategic properties provides target-rich diversification and includes Jackpot Lake, a lithium brine project in Nevada and White Willow, a lithium pegmatite project in Ontario that is the flagship among its growing portfolio of hard-rock lithium assets. Usha trades on the TSX Venture Exchange under the symbol USHA, the OTCQB Exchange under the symbol USHAF and the Frankfurt Stock Exchange under the symbol JO0.

USHA RESOURCES LTD.

"Deepak Varshney" CEO and Director

For more information, please call 778-899-1780, email info@usharesources.com or visit www.usharesources.com. 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About Stardust Power Inc.

Stardust Power Inc. is a development stage manufacturer and refiner of battery-grade lithium products designed to supply the EV industry and help secure America's leadership in the energy transition. Stardust Power is developing a strategically central lithium refinery in Muskogee, Oklahoma with the anticipated capacity of producing up to 50,000 tonnes per annum of battery-grade lithium. Committed to sustainability at each point in the process. Stardust Power is expected to become a publicly traded company on Nasdaq under the ticker symbol "SDST" via a planned business combination with Global Partner Acquisition Corp II ("GPAC II") (NASDAQ: GPAC), a special purpose acquisition company.

Forward-looking statements:

This news release may include "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about entering into a Definitive Agreement and completion of the Jackpot Lake transaction with Stardust Power, strategic plans, future work programs and objectives and expected results from such work programs. Forward-looking information necessarily involve known and unknown risks, including, without limitation: Usha and Stardust entering into the Definitive Agreement; risks associated with general economic conditions; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; and other risks.

Such forward-looking information reflects management's current beliefs and are based on a number of estimates and/or assumptions made by and information currently available to the Company that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors that may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Readers are cautioned that such forward-looking information are neither promises nor guarantees and are subject to known and unknown risks and uncertainties including, but not limited to, general business, economic, competitive, political and social uncertainties, uncertain and volatile equity and capital markets, lack of available capital, actual results of exploration activities, environmental risks, future prices of base and other metals, operating risks, accidents, labour issues, delays in obtaining governmental approvals and permits, and other risks in the mining industry.

The Company is presently an exploration stage company. Exploration is highly speculative in nature, involves many risks, requires substantial expenditures, and may not result in the discovery of mineral deposits that can be mined profitably. Furthermore, the Company currently has no reserves on any of its properties. As a result, there can be no assurance that such forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.

For more information, please call 778-899-1780, email info@usharesources.com or visit www.usharesources.com. 

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SOURCE Usha Resources Ltd.

FAQ

What is the total consideration Usha Resources could receive for the Jackpot Lake project?

Usha Resources (USHAF) could receive up to US$26,025,000 over five years for up to 90% interest in the Jackpot Lake Lithium Brine Project.

What percentage of the Jackpot Lake project will Usha Resources retain after the full earn-in?

After the full earn-in, Usha Resources (USHAF) would retain a 10% stake in the Jackpot Lake project and a 2% Net Smelter Royalty (NSR).

How much working capital does Usha Resources currently have?

As of July 26, 2024, Usha Resources (USHAF) reported having approximately $1.2 million in working capital.

What is Stardust Power's planned lithium production capacity in Oklahoma?

Stardust Power aims to develop a lithium refinery in Oklahoma with a capacity to produce up to 50,000 tons of battery-grade lithium carbonate annually.