The most current and accurate information we have with respect to our lithium agreement is found in the previous annual report. This number of $100k, that is old. At this point, we are in default $300k and will owe an additional $400k by the end of next year.
IN ADDITION, by the end of this year we are required to spend $1.5M in total exploration work on the properties and we have spent a total of only $80k.
Now, I'm not J.P. Morgan, but it appears to me that we will be in default $2M on this agreement by the end of the year.
The ONLY news I want to hear about this is that they reworked the agreement and the timelines are more aligned with the company's current long-run plan. Or, by some miracle, they are able to secure an investor that is willing to sink that much money into exploring property that doesn't even have proven commercially viable quantities of lithium.
A) Lithium Agreement:
Claims
On May 31, 2012, we entered into a purchase agreement with GeoXplor Corp. (“Lithium Agreement”). Under this Lithium Agreement, we have been granted an exclusive four year
exploration license in regards to the two mineral properties described in the Lithium Agreement. One property encompasses 58 placer claims (9280 acres) located in Lida Valley,
Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Lida Valley Property"), and the other encompasses 70 placer claims (11,200 acres) located in
Smokey Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Smokey Valley Property"). These requirements apply to both the Lida Valley
Property and the Smokey Valley Property, and the Work Program requirements may be allocated to the respective properties at the discretion of the Company. The Lida Valley
Property encompasses claims previously included in agreements between the Company and GeoXplor, specifically the Purchase agreement between the Company and GeoXplor
dated December 24, 2009. This Agreement supersedes and replaces all prior agreements in respect to those claims.
Under the Lithium Agreement, the Company is required to:
Make Cash Payments - First Liberty shall pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement a total of
$725,000, according to the following schedule:
(1) Twenty-Five Thousand Dollars ($25,000.00) within 5 days of the execution of this agreement, which amount was paid during the year ended July 31, 2012;
(2) One-hundred Thousand Dollars ($100,000.00) to GeoXplor on or before December 31, 2012, which amount remains outstanding as the date of this filing;
(3) Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2013;
(4) Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2014;
(5) Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2015;
Stock Issuance – As additional consideration, the Purchase Price shall include the issuance of 2,000,000 Shares, subject to such conditions as may be imposed by the rules and
regulations of the United States Securities and Exchange Commission, as follows:
(1) Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2012, which amount remains outstanding as the date of this filing;
(2) Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2013;
(3) Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2014;
(4) Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2015;
Work Commitment – First Liberty shall expend not less than One Million Five-Hundred Thousand Dollars ($1,500,000) in Mineral Exploration and Development Testing ("Work").
The Work shall be scheduled according to the following schedule:
(1) One Hundred Thousand Dollars ($100,000.00) on or before November 15, 2012, which amount remains outstanding as of the date of this filing;
(2) Four-hundred Thousand Dollars ($400,000.00) on or before December 31, 2012, which amount remains outstanding as of the date of this filing;
(3) Five-hundred Thousand Dollars ($500,000.00) on or before December 31, 2013;
(4) Five-hundred Thousand Dollars ($500,000.00) on or before December 31, 2014;
As of date of this report, the Company has expended approximately $80,000 towards the required work program. The Company is presently in negotiations for an amendment to the
Lithium Agreement, which will adjust the stock and payment work requirements.
The Company is in default on its obligations under the agreements. Through to the fiscal year end and date of this report, the Company has not yet achieved a formal extension
and settlement agreement. However, the Company believes it will be possible to obtain such an agreement on terms acceptable to all parties. Until such an agreement is reached,
the value of the properties under the Lithium Agreement have been impaired to reflect the current status.
Conditions for Transfer of Title and Subsequent Limitations–
(1) At such time as the First Liberty has completed the required payments, work program and stock transfers, the Properties shall be transferred to First Liberty by Quitclaim
Deed.
(2) Concurrently with the transfer of title to First Liberty, First Liberty shall convey to GeoXplor a “Net Value Royalty” on production of lithium carbonate and other lithium
minerals from the Properties measured by five percent (5%) of the gross proceeds received by the First Liberty from the sale or other disposition of lithium carbonate or
other lithium compounds less (i) transportation of the product from the place of treatment to the purchaser, (ii) all handling and insurance charges associated with the
transportation, and (iii) any taxes associated with the sale or disposition of the product (excluding any income taxes of First Liberty). First Liberty shall have the further
right to purchase up to four percent (4%) of the Net Value Royalty, in whole percentage points, for One Million Dollars ($1,000,000) for each one percent (1%).
(3) If First Liberty, its assignee or a joint venture including First Liberty, (i) delivers to its Board of Directors or applicable other management a feasibility study
recommending mining of lithium carbonate or other lithium compound from the Properties and such Board of management authorizes implementation of a mining plan,
or (ii) sells, options, assigns, disposes or otherwise alienates all or a portion of its interest in the Properties, First Liberty shall pay GeoXplor an additional bonus of Five
Hundred Thousand Dollars ($500,000) in cash or Shares of First Liberty. The election to obtain cash or shares of First Liberty shall be at the sole election of GeoXplor.
