Tecpetrol Reveals Best and Final Offer Price

(Tecpetrol, 22.Sep.2023) — Tecpetrol Investments S.L., a member of the Techint Group, announced has increased its all-cash offer (the “Offer“) to acquire all of the issued and outstanding common shares of Alpha Lithium Corporation (“Alpha” or the “Company“) to C$1.48 per share and has reduced the two-thirds minimum tender condition of the Offer to a majority of Alpha’s outstanding shares. In addition, in order to provide shareholders with sufficient time to tender their shares to the enhanced Offer, Tecpetrol has extended the expiry time of the Offer to 5:00 p.m. (Vancouver time) on 3 October 2023.

Highlights:

• Tecpetrol increases Offer by 19% to C$1.48 per share, extends bid period to 3 October 2023 and lowers minimum tender condition to the legally required minimum of 50.1%
• Improved price is Tecpetrol’s best and final offer to shareholders following unsuccessful discussions with Alpha’s management
• Enhanced offer is compelling given absence of alternative transactions presented by Alpha management, and the significant near- and long-term risks and challenges with Alpha’s standalone plan
• Tecpetrol does not intend to make any further extensions or other amendments to the Offer. If the improved Offer is not successful, Tecpetrol intends to pursue other opportunities in the lithium sector
• Alpha shareholders are urged to promptly tender or risk losing the Offer

Alpha shareholders should be aware that, on 10 August 2023, Tecpetrol and Alpha executed a confidentiality agreement to facilitate discussions with respect to a potential transaction and the exchange of confidential information. Those discussions have now ceased without an agreement on terms for a board-supported transaction.

Tecpetrol does not intend to make any further extensions or other amendments to the Offer. If the improved Offer is not successful, Tecpetrol intends to pursue other opportunities in the lithium sector.

The Increased Offer Price

Following termination of the unsuccessful discussions with Alpha’s management, Tecpetrol has decided to put forward its best and final offer to Alpha shareholders, increasing the Offer price from C$1.24 to C$1.48 per share (the “Increased Offer Price“), resulting in an improvement in the value of the Offer of 19%. The Increased Offer Price represents a premium of:

• 42% to the volume-weighted average price of the Alpha shares during the 20-trading day period prior to the public disclosure of Tecpetrol’s intention to pursue the Offer;
• 29% to the closing price of the Alpha shares on 19 May 2023, the last trading day prior to the public disclosure of Tecpetrol’s intention to pursue the Offer; and
• 24% to the closing price of the Alpha shares on 21 September 2023, the last trading day prior to this announcement.

Shareholders who have tendered their shares to the Offer prior to this announcement will automatically benefit from the Increased Offer Price if the minimum tender condition is satisfied and the Offer is successful.

Tecpetrol’s improved offer reflects its best and final view of Alpha’s value, including Tolillar, Hombre Muerto and the expected net cash position of the company.

Reasons Alpha Shareholders Should to Tender to the Enhanced Offer

Tecpetrol is confident that the Offer is the best transaction available to Alpha shareholders and represents an opportunity for shareholders to receive compelling, immediate and certain value in the form of an increased offer price of C$1.48 in cash per share from a credible transaction partner that does not require any regulatory approvals to acquire the Company pursuant to the Offer at the expiry time. More specifically:

• NO ALTERNATIVE TRANSACTION. Alpha has had an extensive opportunity to complete a robust market check. Despite Alpha management’s statements that it has received and continues to receive expressions of interest, the fact remains that, after a sale process that has been ongoing for nearly 300 days, no superior proposal – or even alternative transaction – has been announced. Alpha has had ample time to try to find a buyer willing to pay more than Tecpetrol but has been unable to do so. If Alpha does have an alternative with greater value to present to its shareholders, there is more than sufficient time for it to do so before the extended expiry time.
• MATERIAL CASH PREMIUM. The Increased Offer Price represents a substantial 29% premium to Alpha’s unaffected share price on 19 May 2023, the last trading day prior to the public disclosure of Tecpetrol’s intention to pursue the Offer, and an immediate and compelling 24% premium to Alpha’s share price on 21 September 2023. Not only does the all-cash Offer provide immediate liquidity to Alpha shareholders, the Improved Offer Price exceeds the highest trading price for the Alpha shares since the announcement of the Offer on 22 May 2023 and would result in all Alpha warrants, including those expiring on 10 December 2023, to be “in-the-money”.
• ALPHA’S SHARE PRICE MAY SUFFER ADDITIONAL DOWNWARD PRESSURE IF OFFER IS NOT COMPLETED. Since the announcement of the Offer, comparable lithium developer peers have traded down 40%¹, while Alpha is up 3% as of 21 September 2023. Tecpetrol believes that Alpha’s share price is likely to face significant additional downward pressure if the Offer is not completed or Alpha does not transact prior to the expiry of the Offer.
• THE INCREASED OFFER PRICE REPRESENTS A Robust value for Alpha GIVEN the risks facing the company. The Increased Offer Price represents a robust value for Alpha taking into account the risks facing the company:
  • Tecpetrol has reviewed the Preliminary Economic Assessment of the Tolillar Project dated 4 July 2023, and the second Preliminary Economic Assessment initially announced by Alpha on 14 August 2023 and filed on 21 September 2023 (the “PEAs“), and has identified significant concerns with Alpha’s economic assumptions. Among other issues, the model in the PEAs is highly dependent on the discount rate, which, at 8%, is completely inappropriate in light of the early-stage nature of Tolillar, its low lithium concentration, and Argentina country-risk.
  • The resource estimates for Tolillar released by Alpha since the launch of the Offer in the Technical Report dated 8 August 2023 (the “August 2023 Resource Estimate“) purport to increase the size of the resource estimate by 53% (compared to the resource estimate contained in the Technical Report dated 8 September 2022 (the “September 2022 Resource Estimate“)). Tecpetrol does not believe that the information provided in the August 2023 Resource Estimate supports such an increase, which already contemplated optimistic assumptions extrapolated from other well-developed salars. Moreover, the resource estimates set forth in both the August 2023 Resource Estimate and September 2022 Resource Estimate incorporate resources with lithium concentrations that would require unproven technology to be developed to achieve commercial production (cut-off 100 mg/l).
  • While Alpha refers to selected precedent transactions involving other lithium projects, management has failed to address the significantly lower grade and higher risk facing Alpha. Tolillar’s lithium concentration is meaningfully lower than all of the cited precedent transactions and as a result Tolillar will require unproven DLE technology to be a viable project.
• High Risk Standalone Plan. Tecpetrol believes that Alpha faces significant risks and challenges, and that its shareholders would be best served by accepting our improved Offer, rather than to continue being exposed to these risks. In particular:
  • Alpha would be required to raise a minimum of US$777mn to fund construction of the Tolillar Project (a preliminary figure that could increase materially). The availability and cost of such financing is highly uncertain, and assuming Alpha is able to raise such capital, Alpha shareholders will face significant dilution.
  • The Tolillar Project’s low lithium concentration makes proven evaporation extraction technologies unsuitable and will require the use of DLE technology that, according to Alpha’s own PEAs, is novel and requires a pilot plant to further evaluate the process recovery method, all of which significantly increases development risk and timeline.

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1	Lithium developer peers include Argosy Minerals, Galan Lithium, Lake Resources, Lithium Chile, Lithium South, Standard Lithium and Vulcan Energy.

Alpha Shareholders Urged to Promptly Tender or Risk Losing Offer

It is a non-waivable condition of the Offer that there be validly deposited under the Offer more than 50% of the outstanding Alpha shares, excluding Alpha shares owned by Tecpetrol and its joint actors. If this legally required minimum tender condition is not satisfied by the expiry time of 5:00 p.m. (Vancouver time) on 3 October 2023, no Alpha shares will be acquired by Tecpetrol and Alpha shareholders will not be able to participate in the Offer. Accordingly, Alpha shareholders are urged to promptly tender their shares under the Offer prior to the expiry time, as Tecpetrol has put forward its best and final offer and does not intend to make any further extensions or other amendments to the Offer. If the improved Offer is not successful, Tecpetrol intends to pursue other opportunities in the lithium sector.

Additional Offer Details and How to Tender

A notice in respect of the increased offer price, extension of the expiry time and waiver of the minimum tender condition has been provided to the depositary of the Offer, and a Notice of Variation in respect of the foregoing will be filed with the Canadian securities regulators on SEDAR+ under Alpha’s profile at www.sedarplus.ca and will be mailed to Alpha shareholders in accordance with applicable law. Except as described herein, no other amendments or variations to the Offer have been made, and the Offer remains subject to the satisfaction or waiver of its conditions at or prior to the expiry time.

Tecpetrol encourages Alpha shareholders to read the full details of the Offer and other important information set forth in the Notice of Variation, which should be read in conjunction with the take-over bid circular dated 8 June 2023 and related offer documents. The take-over bid circular and related offer documents are available on SEDAR+ under Alpha’s profile at www.sedarplus.ca.

Shareholders who have questions or require assistance in tendering their Alpha shares may contact Laurel Hill Advisory Group, the Depositary and Information Agent for the Offer, by telephone toll-free inside North America at 1-877-452-7184, or outside North America at 1-416-304-0211, or by email at assistance@laurelhill.com.

Alpha shareholders are urged to tender their shares prior to 5:00 p.m. (Vancouver time) on 3 October 2023, unless the Offer is further extended, accelerated or withdrawn by Tecpetrol in accordance with its terms. Tecpetrol does not intend to further extend the expiry time of the Offer (except as required by law). Shareholders whose shares are registered in the name of an investment advisor, stock broker, bank, trust company or other intermediary should immediately contact that intermediary for assistance if they wish to accept the Offer so that the necessary steps can be taken to enable the deposit of such shares under the Offer. Intermediaries likely have established tendering cut-off times that are prior to the expiry time. Shareholders must instruct their intermediaries promptly if they wish to tender.

About the Tecpetrol Energy Transition Unit

Tecpetrol’s Energy Transition Unit is Techint Group’s dedicated business unit responsible for advancing its position in the global energy transition through investments in decarbonized energy sources, carriers and technologies, with the objective of contributing to a significant reduction in the carbon footprint. As part of this initiative through its subsidiary Techenergy Lithium S.A., Tecpetrol has built a lithium processing pilot plant in northern Argentina engineered for scale, which supports a production flowsheet involving direct lithium extraction. For additional information on Tecpetrol, please visit its website at https://www.tecpetrol.com/en. 

The Techint Group is a global conglomerate with diversified business lines in steelmaking, complex infrastructure construction, design and construction of industrial plans and machinery, technologies for the metals and mining industries, oil and gas exploration and production and research-oriented health facilities. Through our six main companies – Tenaris S.A. (NYSE and Mexico: TS and EXM Italy: TEN), Ternium S.A. (NYSE: TX), Techint Engineering & Construction, Tenova, Tecpetrol and Humanitas – the Techint Group operates on six continents, employs 79,300 employees and generates over US$33bn in annual revenue. We have an extensive track record of completing large transactions in industrial and extractive sectors around the globe, including in Canada, and in navigating complex regulatory frameworks. For additional information on the Techint Group, please visit its website at https://www.techintgroup.com/en. 

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