P2P Health Systems Inc.
NEX BOARD : PTP.H

June 03, 2009 12:29 ET

P2P Executes Agreement for Lithium Project in Chile

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 3, 2009) - P2P Health Systems Inc. (NEX:PTP.H) (the "Company") is pleased to announce that it has entered into a letter agreement dated May 22, 2009 (the "Agreement") with Salares Atacama SCM ("SALA"), a private Chilean incorporated company, and its individual shareholders, namely Rinaldo Vecchiola Trabuco, Guido Vecchiola Trabuco, Edgar Vecchiola Trabuco, Alejandro Moreno Prhens and Juan Villarzu Rhode, all residents of Chile (collectively, the "Shareholders"). Pursuant to the Agreement, the Company has the option to acquire up to 70% of the outstanding share capital of SALA. SALA is the 100% owner of seven salares (brine lakes) known as Piedra Parada, Grande, Aguilar, Agua Amarga, La Isla, Las Parinas and Maricunga (collectively, the "Concessions") in Chile's Region III. Historical sampling has reported lithium and potash levels in all of the Concessions. Brine sources for lithium production accounted for over 60% of the world's primary supply in 2008.

The transaction is at arm's length and will result in the Company's reactivation and graduation from the NEX board to the TSX Venture Exchange (the "Exchange") as a Tier 2 mining issuer (the "Reactivation").

The Agreement

Under the Agreement, the Company has the exclusive right and option to acquire:

1. an initial 50% ownership interest (the "First Option") in SALA, and indirectly the Concessions, upon filing with the Canadian regulatory authorities a National Instrument 43-101 compliant technical report regarding the Concessions (the "Report") and carrying out expenditures on the Concessions of US$2,500,000 on or before the third anniversary of the entering into by the parties of the Definitive Agreement (as defined below); and

2. an additional 20% ownership interest (the "Second Option") in SALA, and indirectly the Concessions, upon completion, at the Company's expense, and delivery to SALA's board of directors a bankable feasibility study (the "Feasibility Study") on the Concessions within 24 months from the date the First Option is exercised.

Notwithstanding that the Company may elect to exercise the First Option, the Company has no obligation to complete and deliver the Feasibility Study or exercise the Second Option. If the Company exercises the First Option but does not exercise the Second Option, the Company will retain its 50% ownership interest in SALA. If the First Option is terminated other than by the exercise thereof, the Company will have no further obligations or interest in the Concessions.

Upon completion of the Feasibility Study the Company will have the exclusive right to arrange for project financing for the Concessions which are the subject of the Feasibility Study.

The Board of Directors of SALA will at all times be comprised of three directors with the Company entitled to appoint two nominees and the Shareholders collectively being entitled to appoint one nominee regardless of the number of shares of SALA held by the Company or the Shareholders at any such time. The Company and the Shareholders will appoint a technical management committee which will be comprised of three members, with the Company entitled to designate two members and the Shareholders collectively being entitled to designate one member, to oversee the operations of the exploration and development of the Concessions including the supervision of the preparation of the Feasibility Study.

If any of the Shareholders or the Company wishes to sell its ownership interest in SALA, the other parties have a pre-emptive right of first refusal to acquire such shares.

The parties have agreed to use their best efforts to settle and execute formal documentation as necessary relating to the transactions set out in the Agreement, including but not limited to a definitive option and shareholder agreement (the "Definitive Agreement") within 120 days from the date of execution of the Agreement.

Financing

The Company also announces a non-brokered private placement for gross proceeds of up to CAN$1,200,000 (the "Private Placement") consisting of up to 15,000,000 subscription receipts (the Subscription Receipts"), pre-Consolidation (as defined below), at a price of CAN$0.08 per Subscription Receipt. Each Subscription Receipt will entitle the holder to acquire, for no additional consideration, one unit of the Company (a "Unit") comprised of one common share of the Company and one share purchase warrant (a "Warrant"). Each Warrant will be exercisable to purchase an additional common share of the Company at a price of CAN$0.16, pre-Consolidation, for a period of 36 months from the date of deemed exercise of the Subscription Receipts. The Subscription Receipts will be deemed exercised into the Units upon completion of the Reactivation.

The gross proceeds from the Private Placement will be held in escrow and will be released to the Company upon completion of the Reactivation. If the Reactivation does not occur, the proceeds from the Private Placement will be returned to purchasers and the Subscription Receipts will be cancelled.

The proceeds from the Private Placement will be used for exploration work on the Concessions in accordance with the requirements of the Agreement and the recommendations contained in the Report and for general working capital purposes.

Sponsorship

The Company will be seeking an exemption from the Exchange's sponsor requirements in respect of the Change of Business (as defined below) in accordance with the rules of the Exchange.

Board of Directors

The Company also announces that Mr. Todd Hilditch has joined its Board of Directors. Mr. Hilditch is currently a director of two companies listed on the Exchange and has experience in the management of junior mining companies. In addition, Mr. Fred Baker has resigned form the Board of Directors and the Company would like to thank him for his dedication and service.

Reactivation

The Company has been inactive for more than one year, when it ceased its involvement in the research and development of industrial products technology. The Company's shares are listed on the NEX Board of the Exchange under the symbol PTP.H. The transaction will result in the Reactivation of the Company under the Exchange's policies and will require a change of the business of the Company to the mining sector (the "Change of Business"). The Company's shares are currently halted in connection with this announcement and will remain halted pending completion of the Reactivation or until such earlier date as the Exchange and the Company determine the halt is no longer required. Once reactivated, the Company intends to transfer its listing from the NEX Board to the Exchange.

Consolidation and Name Change

The Company is proposing to consolidate its issued and outstanding share capital, with corresponding adjustments to its outstanding convertible securities, on the basis of a one post-consolidation common share for every two pre-consolidation common shares of the Company (the "Consolidation"). The Company currently has 44,229,673 common shares issued and outstanding, has granted 4,570,000 options and issued 4,200,000 warrants, for a total fully diluted share capital of 52,999,673 shares.

Post-Consolidation, excluding the shares and warrants to be issued upon the deemed exercise of the Subscription Receipts, the Company will have 22,114,837 common shares issued and outstanding and options and warrants granted/issued to purchase 4,385,000 common shares (representing 26,499,837 fully diluted shares).

In addition, conditional upon completion of the Reactivation, the Company proposes to change its name to "Salares Lithium Inc." (the "Name Change").

Shareholder Approval

The Change of Business, Consolidation and Name Change is subject to approval by the shareholders of the Company which will be sought at a special meeting of the shareholders of the Company to be held on a date to be announced.

Closing Conditions and Caution to Investors

Completion of the transaction is subject to a number of conditions, including, Exchange acceptance, and shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

In addition, closing of the transactions contemplated by the Agreement is subject to the following additional conditions: (a) completion of satisfactory due diligence review of SALA by the Company; and (b) there not occurring any one or more changes in the business, assets or financial condition of SALA that would individually or in the aggregate have, or reasonably be expected to have, an adverse effect on the Company or its interest in the Agreement or the transactions contemplated hereby.

Investors are cautioned that, except as disclosed in the management information circular or filing statement, as applicable, to be prepared in connection with the transaction, any information released or received with respect to the proposed Change of Business or Reactivation may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • P2P Health Systems Inc.
    Todd Hilditch
    Director
    (604) 443-3831
    or
    P2P Health Systems Inc.
    Greg Thomas
    Director
    (604) 730-0234