Why Lithium Power Shares Are Up Today (ASX:LPI)

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Lithium Power International Ltd [ASX:LPI] said today they’re splitting the company.

LPI will concentrate its entire focus on developing the Maricunga Lithium Brine Project. Located in Chile, in the lithium triangle, Maricunga is LPI’s flagship project.

On the other hand, its West Australian assets will be spin out into a new company that will list on the ASX.

‘An opportunity to create long-term value’

The new company will focus on lithium exploration in Western Australia. LPI has hard rock lithium assets in Greenbushes, right along strike from the Talison mine, and Pilgangoora, next to assets belonging to Pilbara Minerals.

LPI’s board thinks that the demerger will ‘unlock the strategic value of the WA assets for the benefits of shareholders.

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According to LPI’s Chief Executive Officer Cristobal Garcia-Huidobro:

LPI believes that there is a compelling strategic rationale for the demerger of LPI’s WA hard rock lithium exploration assets. The Demerger will offer existing LPI shareholders the opportunity to create long term value via a new, ASX-listed company.

These assets deserve their own time, attention and resources, and LPI’s Board believes that it is the best outcome for LPI shareholders to create a dedicated, WA-focused company that has the technical, human and financial resources to advance these exciting assets. A capital reduction and in-specie distribution to LPI shareholders will provide a direct level of participation in the WA assets. It will also allow LPI to focus solely on the development of its flagship Maricunga Lithium Brine Project in Chile, which is at a much more advanced stage of development.

LPI said shareholders will get shares in the new demerged company on a pro-rata basis via capital reduction and in-specie distribution.

Markets liked the move

LPI expects the whole thing will be done in the first six months of 2022, as long as they get all approvals necessary, including shareholder approval.

Shares for Lithium Power International are up more than 3.4% after releasing the news. Shares were trading at 60 cents at time of writing, up from 58 cents at yesterday’s close.

Interested in investing in lithium? Check out our complete guide on how to invest in ASX lithium stocks. For more information, click here.




Selva Freigedo,
For Money Morning

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About Selva Freigedo

Selva Freigedo is an analyst at Money Morning. She has a background in financial economics, but what makes Selva´s experiences different to many are the places she has lived and worked. Born in Argentina, she has also lived in Brazil, the US, Spain, and now Australia. She has seen up…

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