Major Alpha Lithium Shareholder Opposes Price and Structure of Tecpetrol Hostile Bid

Article content

VANCOUVER, BC, June 26, 2023 (GLOBE NEWSWIRE) — Kyle Stephenson, strategic advisor and major shareholder of Alpha Lithium Corp. (NEO: ALLI) (OTC: APHLF) (German WKN: A3CUW1), an open letter to fellow shareholders declared its opposition to the price and structure of the hostile bid for Tecpetrol Investments SL.

The full text of the letter is included below:

Article content

To my fellow contributors,

My name is Kyle Stephenson. I currently own 9,200,000 common shares of Alpha and convertible securities for an additional 1,300,000 shares of Alpha. As far as I know, I am Alpha Lithium’s largest shareholder.

Article content

I have been heavily involved in the exploration and development of Argentine lithium since 2016, when I became President, CEO, and Director of Millennial Lithium Corp. We developed the Bastos Grandes lithium brine project in Argentina, about 70 kilometers northeast of the Tulear Alpha project. We sold Millennial to Lithium Americas Corp. In 2022, in a deal that will value Millennial at approximately C$491,000,000. This experience gave me an insight into the exploration and development of Argentine lithium solution assets, and their value in strategic M&A transactions.

In addition to my millennium experience, I am familiar with Alpha, its assets, and its management team. I have dealt with them in the past, and hope to continue to work with them in the future.
In 2019, I had the opportunity to travel to Argentina with the management and experience, first hand, and the potential of Tolllar. Since then, I’ve been impressed with management’s ability to add shareholder value, and continue to admire the work they’ve done in developing Alpha’s asset portfolio.

Article content

Article content

I have carefully watched Tecpetrol’s attempt to acquire Alpha from its shareholders. I have reviewed Tecpetrol’s bid circular, as well as the Alpha directors’ prospectus, and it is clear to me that Tecpetrol’s offer is wholly inadequate, and I do not intend to offer any of my shares.

In my opinion, Tecpetrol’s bid is an opportunistic attempt to take over Alpha’s Tollillar and Hombre Muerto assets at an untenable discount to their intrinsic value, which I strongly oppose. The bid fails to deliver value to Alpha shareholders, myself included, for two main reasons: one is that the valuation is embarrassingly low for Tolillar alone, and two, Tecpetrol is trying to acquire everyone Assets, including Hombre Muerto and over $30 million in cash, at no additional charge.

Article content

1. Insufficient value – a foul attempt by all accounts

Asset valueTecpetrol’s offering significantly reduces the value of the Tollillar asset on its own. As the Alpha team wrote in the managers post, the bid price represents a big sale to recent salt lithium transactions in Argentina, including the millennial lithium sale we completed in 2022. The confusing discount ignores the value added by the unique features of the Tollar Alpha, most notably: Tolllar may be one of the last wholly owned payroll lithium vehicles in the world. Argentina, and Tullear hosts a unique and valuable reserve of fresh water.

In addition to the obvious operational advantages that come with exclusive ownership of the entire salary, an independent freshwater recharge study commissioned by Alpha indicated that a freshwater reservoir located within the Tulare Salar mining residences could sustainably support the large freshwater withdrawals required for a Class A project ( See Alpha’s press release dated January 23, 2023 for more information).

Article content

Market value: The offer price of $1.24 represents approximately a 15% discount to Alpha’s closing price on Friday, June 23, 2023. When Tecpetrol first announced its intention to place an offer, Alpha’s share price had been steadily rising, consistent with prevailing trends in lithium carbonate equivalent prices, Which makes their inappropriate offer even less attractive. Alpha shares trading as high as $1.45 since the tender was announced clearly indicates that I’m not alone in considering this to be a “take under” rather than a “take over”, which is not going to get the shareholder support it needs.

Tolillar’s unique features make it an incredibly compelling standalone opportunity that, by any measure, is worth much more than what Tecpetrol has offered to pay.

Article content

2. Predator Hulk – Tecpetrol wants it all, at a deep discount

Assuming Tecpetrol has taken enough time to learn about Alpha, they know, or should know, that Alpha has at least two distinct and attractive assets: (1) the Tollillar project, and (2) the roughly 5,000-hectare land site in Hombre Muerto Salar World class. For my fellow contributors who haven’t had a chance yet, I’d encourage you to check out Alpha’s technical report on the origins of Hombre Muerto. It’s available under Alpha’s profile at www.sedar.com. Even before Hombre Muerto’s technical report is submitted, it will be clear to anyone who has conducted appropriate due diligence on Alpha that Hombre Muerto’s early-stage assets represent compelling potential for additional shareholder value. Here’s the second problem with Tecpetrol’s bid: For a low price, Tecpetrol wants the risk-free Tollillar project, potential discovery of Hombre Muerto’s assets, and nearly $30 million in capital.

Article content

Tecpetrol refused to participate in the Tolillar sale when Alfa invited it, 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 acquire Tolilar at a discount, shareholders need to understand that the proposed structure will also allow Tecpetrol to benefit 100% of Hombre Muerto’s future potential, whatever that may be. It might be, for basically nothing.

I put my trust and capital behind the team at Alpha to develop Tolillar from a very early stage, and I admire the work they’ve done. I want to bet on this management team again to do the same at Hombre Muerto.

I strongly encourage Tecpetrol to deal with Alpha in a constructive manner and to offer a fair price for Alpha and/or its Tolllar assets. I also encourage them to include a structure considering the exit of Hombre Muerto along with the necessary working capital to begin developing its potential for everyone Existing shareholders of Alpha.

your fellow contributor,

(Occurred)

Kyle Stephenson
kyle@blueprintcapital.ca
604,788,0537

Article content