Liberty Star Uranium and Metals Corp (LBSR)

[Rustler]

With the below lawsuit just filed two days ago, I believe we'll see a LOT of consolidation.

Liberty Star Uranium & Metals Corp. (OTCBB:LBSR) announces that on August 26, 2010, Platinum Long Term Growth VI LLC and Alpha Capital Anstalt, two former lenders of the Company (the “Plaintiffs”), filed lawsuit in the United States District Court, Southern District of New York, against the Company and James Briscoe, (President and CEO). The Plaintiffs are seeking to require the Company to honor outstanding warrants held by the Plaintiffs at an exercise price of $0.002 (two tenths of one cent) per share and to issue to the Plaintiffs ten times the number of warrants that the Company has on record, or in the alternative money damages. The claim is based on a provision in the warrant agreements that would permit a “ratchet down” of price and a multiplication of number of warrants in the event of certain share issuances by Liberty Star Uranium & Metals Corp.

The Plaintiffs are claiming that Platinum is entitled to 201,053,015 warrants and that Alpha is entitled to 240,919,010 warrants all exercisable at $0.002 per share. If the Plaintiffs are successful in their lawsuit, a total of 589,177,000 warrants would be outstanding at an exercise price of $0.002 to all warrant holders who are former lenders to our company. These warrants all contain a cashless exercise feature, permitting issuance of shares without payment of any cash to the company. The Plaintiffs are also claiming money damages for non-compliance with what they claim are the terms of the warrants, costs and attorney fees incurred in the action.

Currently, there are 434,784,657 common shares of Liberty Star outstanding. If the warrant holders are successful in their lawsuit, they and other warrant holders could exercise warrants for over 55% of the company’s equity at a price of $0.002 per share.