UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): August 24,
2010
Li3
Energy, Inc.
(Exact
name of registrant as specified in its charter)
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Nevada
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333-127703
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20-3061907
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(State
or Other Jurisdiction
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(Commission
File
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(I.R.S.
Employer
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of
Incorporation)
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Number)
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Identification
Number)
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Av.
Pardo y Aliaga 699
Oficina
802
San
Isidro, Lima, Peru
(Address
of principal executive offices, including zip code)
(51)
1-212-1880
(Registrant’s
telephone number, including area code)
Copy
to:
Adam S.
Gottbetter, Esq.
Gottbetter
& Partners, LLP
488
Madison Avenue, 12th Floor
New York,
NY 10022
Phone: (212)
400-6900
Not
applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.02 Termination of a Material Definitive
Agreement
As
previously reported, as of July 29, 2010, Li3 Energy, Inc. ( “Li3,” “we,” “us”
or “our”) entered into a preliminary and non-binding Letter of Intent (the
“LOI”) with the shareholders (the “Lacus Shareholders”) of Lacus Minerals S.A.,
an Argentinean corporation (“Lacus”) for a proposed transaction that involves
the restructuring of the existing Master Option Agreement with Lacus, pursuant
to which we would have acquired 100% of the issued and outstanding shares of
Lacus, and salt-mining claims on approximately 156,000 acres on the Centenario,
Rincón and Pocitos salars would be added to the portfolio of mining properties
under option.
The
Master Option Agreement provides us three options (collectively, the “Options”),
to acquire up to an 85% interest in: (a) approximately 70,000 acres situated on
prospective brine salars in Argentina, known as Rincón, Centenario and Pocitos
(the “Master Lacus Properties”); and (b) salt-mining claims on approximately
9,000 additional acres in certain other areas of mutual interest on some of
those same salars (the “Third Parties Properties” and, together with the Master
Lacus Properties, the “Lacus Properties”) that may be acquired upon exercise of
two options (collectively, the “Third Parties Options”). Under a
Services Agreement, Lacus would provide administration and management services
for the project.
Prior to the formation of an Executive
Committee (to determine the policies, objectives, budget for and actions related
to the first exploration phase) comprised of representatives from Li3 and Lacus, as called for in the Master Option
Agreement, Lacus had developed an exploration work plan that included surface
pit sampling and drilling. On August 2, 2010, Lacus presented to us
the brine chemistry results from the surface pit sampling on the Rincon, Pocitos
and Centerario salars. Li3’s Board of Directors determined on August
12, 2010 that: these chemistry results do not meet Li3’s criteria for economic
brine reserves; the work plan recommended by Lacus was not acceptable; and
funding of a drilling program would be suspended. We so informed
Lacus on August 13, 2010.
On August
24, 2010, we received a notice from Lacus purporting to terminate the Master
Option Agreement and the Services Agreement because of our failure to pay a
total of $275,217 alleged to be due under these agreements.
On August
26, 2010, we notified the Lacus Shareholders that, based on the unsatisfactory
results of our due diligence, we do not intend to execute any definitive
agreements for the transaction detailed in the LOI. The LOI will
automatically terminate on August 31, 2010, pursuant to its
terms. Because the conditions set forth in the LOI will not be
fulfilled, we will not be obligated to pay to the Lacus Shareholders the
$300,000 break-up fee specified in the LOI.
Also on
August 26, 2010, we informed Lacus by letter that the Master Option Agreement
calls for the existence of an Executive Committee, and that all management
decisions in connection with the exploration works are to be decided by the
Executive Committee, on the terms and conditions set forth in the Master Option
Agreement. We formally requested Lacus to withdraw the purported
notice of termination of the Master Option Agreement and the Services Agreement,
and to attend to a meeting of the Executive Committee on September 1, 2010, in
order to discuss the way forward in relation to the exploration works to be
performed in the properties, the work plan, and a budget therefor. To
date, we have not received a response to this letter.
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We had
agreed to contribute $1,688,000 on or before August 31, 2010, as work
commitments under the Master Option Agreement for purposes of funding the
exploration works that are currently being performed on the Lacus Properties,
and an additional $1,312,000 as work commitments through September 2011. We also
agreed to pay $500,000 to Lacus on or before March 12, 2011. We would
require additional capital to fund these commitments, and there can be no
assurance that such financing will be available to us, or will be available on
terms acceptable to us.
However,
although there can be no assurance as to the ultimate outcome, we believe we
have valid reasons under the relevant agreements for suspending payment of such
amounts. However, our possible losses in connection with any action that may be
brought against us in these matters could be material to our consolidated
financial condition, results of operations and cash flows.
Item
8.01 Other Matters.
We have
entered into a non-binding term sheet with a third party investor to provide us
with a committed equity funding facility for up to $10 million, with a term
of 24 months. The investor would purchase our common stock from us from
time to time during the commitment period at our request (a "put") at a stated
discount to market price, subject to certain dollar and share volume limitations
for each put. A commitment by the investor to enter into the facility is
subject to the investor's due diligence and other conditions, including our
filing a registration statement with the SEC covering the shares and its
becoming effective. There can be no assurance that these conditions will
be satisfied, or, even if they are satisfied, that a facility will be entered
into.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Li3
Energy, Inc.
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Dated: August
30, 2010
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By:
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/s/ Luis
Saenz
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Name: Luis
Saenz
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Title: Chief
Executive Officer
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