Grounded Lithium to acquire 30% stake in Sask. assets

Executive Summary

• Grounded Lithium Corp. has entered into a definitive agreement to acquire a 30% minority interest in oil and gas mineral rights in Saskatchewan for approximately $25,000 in cash.
• The transaction is a non-arm's-length deal with Analogy Capital Advisors Inc., controlled by Chairman John D. Wright, intended to supplement cash flow and working capital for the company's primary Kindersley Lithium Project (KLP).
• Grounded will farm out its combined 60% interest (including a third-party partner) to a newly formed limited partnership, SRDLP, which raised $900,000 for drilling activities.

Key Details

• Transaction Structure: Grounded acquired a 30% mineral interest in approximately four sections in south-central Saskatchewan near Lloydminster.
• Consideration: Approximately $25,000 in cash paid to Analogy Capital Advisors Inc. (a related party).
• Ownership Breakdown:
  • Grounded Lithium: 30% working interest.
  • Analogy Capital Advisors Inc.: 40% working interest (retained).
  • Unrelated Third Party: 30% working interest.
• Farmout Agreement: Grounded and the third party combined their 60% interest into the Saskatchewan Renewal Drilling Limited Partnership No. 1 (SRDLP).
• SRDLP Financing: The partnership raised $900,000 from subscribers to fund drilling.
• Revenue Sharing (Net Operating Income - NOI):
  • Pre-Payout: SRDLP retains 95% of the 60% NOI share; Grounded receives 1.5% of NOI.
  • Post-Payout: SRDLP retains 55% of the 60% NOI share; Grounded receives 13.5% of NOI.
• Operational Plan:
  • Drilling up to two exploratory/development wells into the Mannville sequence.
  • Shallow depth (<700 meters) to minimize capital expenditures.
  • Potential for up to three separate oil zones.
  • Estimated payback period of less than one year at current commodity pricing.
• Timeline: Operations anticipated to commence early in 2026, pending government well licensing approval.
• Regulatory Status: Conditionally approved by the TSX Venture Exchange; closing pending minor filing requirements.
• Exemptions: The company relied on exemptions from formal valuation and minority shareholder approval under Multilateral Instrument 61-101, as the transaction value does not exceed 25% of Grounded's market capitalization.

Notable Quotes

• "Grounded is opportunistically leveraging off our internal oil and gas technical expertise to diversify the resource portfolio of the company and, in doing so, provide a supplemental source of NOI to advance our interests in the KLP... Postpayout, we expect noteworthy cash flows, which will be used to satisfy future working capital requirements, and, should this venture continue and grow, proceeds from it have the potential to fund, in part, our share of future joint venture commitments for the KLP." — Gregg Smith, President and CEO