The full text of Mr. Stevenson’s open letter is set out below for reference. The Company notes that the letter was issued by
To my fellow shareholders,
My name is
I have been heavily involved in the Argentine lithium exploration and development industry since 2016, when I became President, CEO and a director of
In addition to my Millennial experience, I am familiar with Alpha, its assets, and its management team. I have done business with them in the past, and hope to continue working with them in the future. In 2019 I had the opportunity to travel to
I have carefully watched Tecpetrol’s attempt to acquire Alpha from its shareholders. I have reviewed Tecpetrol’s bid circular, as well as Alpha’s Directors’ Circular, and it is clear to me that the Tecpetrol bid is wholly inadequate, and I do not intend to tender any of my shares.
In my opinion, the Tecpetrol bid is an opportunistic attempt to seize both Alpha’s Tolillar and Hombre Muerto assets at an indefensible discount to their true value, which I strongly oppose. The bid fails to deliver value to Alpha’s shareholders, including myself, for two key reasons: The first is the valuation is embarrassingly low for Tolillar alone, and second, Tecpetrol is trying to get all the assets, including Hombre Muerto and over
1. Inadequate Value – a stink bid by all measures
Asset Value: The Tecpetrol bid significantly undervalues the Tolillar asset on its own. As the Alpha team wrote in their Directors’ Circular, the offer price represents a substantial discount to recent lithium brine transactions in
In addition to the obvious operational advantages that come with exclusive ownership of the entire salar, an independent freshwater recharge study commissioned by Alpha indicated that the freshwater aquifer located within the Tolillar salar mining tenements can sustainably support the large freshwater withdrawals needed for a top tier project (see Alpha’s press release of
Market Value: The bid price of
The unique features of Tolillar make it an incredibly compelling standalone opportunity, and by any measure, worth considerably more than Tecpetrol has offered to pay.
2. Predatory Structure – Tecpetrol wants everything, at a huge discount
Assuming Tecpetrol has taken adequate time to familiarize itself with Alpha, they know, or ought to know, that Alpha has at least two distinct and compelling assets: (i) the Tolillar project, and (ii) the roughly 5,000-hectare land position in the world-class Hombre Muerto Salar. For those of my fellow shareholders who have not yet had the opportunity, I would encourage you to review Alpha’s technical report about its Hombre Muerto asset. It’s available under Alpha’s profile at www.sedar.com. Even prior to the filing of the Hombre Muerto technical report, it would be clear to anyone who had conducted appropriate due diligence on Alpha that its early stage Hombre Muerto asset represents compelling potential for additional shareholder value. Therein lies the second problem with the Tecpetrol bid: for a low-ball price, Tecpetrol wants the de-risked Tolillar project, the discovery potential of the Hombre Muerto asset, and approximately
Tecpetrol declined to participate in the Tolillar sale process when invited by Alpha, instead deciding to make a hostile bid for the entire company. While I expect Tecpetrol hopes to be able to use the hostile bid as a way to get Tolillar at a discount, shareholders need to understand that the proposed structure would also allow Tecpetrol to also take 100% of the future potential of Hombre Muerto, whatever that may be, for essentially nothing.
I put my trust, and capital, behind the team at Alpha to develop Tolillar from a very early stage, and am impressed by the work they have done. I want to bet on this management team again to do the same thing in Hombre Muerto.
I strongly encourage Tecpetrol to engage with Alpha in a constructive manner and offer a fair price for Alpha and/or its Tolillar asset. I further encourage them to include a structure which contemplates a spin out of Hombre Muerto along with the working capital necessary to begin to develop its potential for the benefit of all current shareholders of Alpha.
Your fellow shareholder,
[signed]
kyle@blueprintcapital.ca
604.788.0537
Take No Action
The Board and management of Alpha will not tender to the Tecpetrol bid. For the reasons fully described in our Directors’ Circular, Alpha recommends that shareholders REJECT the undervalued and opportunistic Hostile Offer. To reject, shareholders simply need to do nothing. If you have already tendered your Common Shares and wish to withdraw, simply ask your broker or contact
Advisors
ON BEHALF OF THE BOARD OF ALPHA LITHIUM CORPORATION
“Brad Nichol”
President, CEO and Director
For more information:
Alpha Lithium Investor Relations
Tel: +1 844 592 6337
relations@alphalithium.com
www.alphalithium.com
1 800 749 9179 (toll free in
+1 647 251 9740 (collect, outside
contactus@kingsdaleadvisors.com
www.ProtectAlphaLithium.com
About
Forward-Looking Statements
This news release contains forward-looking statements and other statements that are not historical facts, including statements concerning the Hostile Offer. Forward-looking statements are often identified by terms such as “will”, “may”, “should”, “anticipate”, “expects” and similar expressions. All statements other than statements of historical fact, included in this news release are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations include the results of further discussions, if any, between the Company, and third parties, the ability of the Company to successfully complete a transaction involving itself or its assets, or to do so on a timely basis, global economic conditions and other risks detailed from time to time in the filings made by the Company with securities regulators. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, include numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will update or revise publicly any of the included forward-looking statements as expressly required by applicable law.
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