Desert Lion Energy & the Namibian lithium story

The lithium story in Namibia became prominent when Xinfeng Investments, a Chinese company, courted controversy after buying a mine for N$50m from some officials.

The story also picked pace when Xinfeng Investments was caught shipping vast quantities of lithium ore to China for testing.

Not only was the story about the shipments, but it was also about the ownership of the exclusive prospecting licence and the farm - Kohero No 13 - between Omaruru and Uis in the Erongo region.

 

Before Xinfeng Investments and Farm Kohero, there was Desert Lion Energy and its plans for what could have been Namibia's biggest lithium mine.

There was also the ownership confusion story of Farm Okongova, where Desert Lion Energy's exclusive prospecting licences covered.

Even the shipping out of lithium concentrate started with Desert Lion Energy, which teamed up with !Huni-/Urib Investments in 2018.

Thomas Mushimba and Mark Welthagen own !Huni-/Urib Investments.

The companies shipped out 30 000 tons of lithium to Jiangxi Jinhui Lithium Co. Limited. There were plans to ship the same amount every six weeks until the lithium prices fell.

 

Karibib Lithium Project

The Australian-based company, Lepidico, has an 80% stake in the Kribib Lithium Project. !Huni-/Urib Investments has the other 20%. Lepidico acquired the 80% stake from Desert Lion Energy in 2019.

Desert Lion Energy bought the project from Black Fire Minerals, which had bought it from another Australian company called Sunrise Minerals in 2009.

Black Fire acquired the property in 2009 by buying Sunrise's Namibian subsidiary, Starting Right Investments 94, which held the Karibib lithium exclusive prospecting licences 3750 and 3751.

When Desert Energy acquired the property, there were stockpiles of about 500 000 tons of lithium-bearing material at the Rubicon and Helicon mines.

Desert Lion Energy CEO Tim Johnston said at the time that the stockpiles offered an opportunity to generate cash by extracting the lithium, which at the time represented the start of a staged production approach. 

Johnson said the stockpiles required sorting to extract the lepidolite material, which they successfully did.

Desert Lion Energy mined 30 000 tons of the stockpiled material in 2018 and shipped them out to Jiangxi Jinhui Lithium Co.

The mines ministry granted Desert Lion Energy a full mining licence in August 2018 to mine in-situ material for ten years. 

The company said the shipment was the largest ever made from Africa. The agreement was that Desert Lion would ship out 30 000 tons every six weeks.

Then the price of lithium dropped, and the shipment stopped. Desert Lion Energy had to seek financial help.

In December 2018, Desert Lion signed up for a loan with Toronto-based fund AIP Asset Management through a convertible facility and a private placement led by Pella Resources/ Adonis Pouroulis.

Farm Okongava

The exclusive prospecting licence Desert Lion got from the mines ministry in February 2017 was on Farm Okongova, which is more than 15 000ha.

Desert Lion Energy paid C$180 000 for the exclusive prospecting licences.

One issue was the Tsoaxudaman people who claimed the farm, citing an arrangement made with the lands minister Alpheus !Naruseb that the farm should be incorporated into the Otjimbingwe communal area.

The then lands spokesperson Chrispin Matongela said Desert Lion was mining and occupying a large portion of the farm.

Matongela also said Desert Lion was clearing bushes to make roads and drilling boreholes without the lands ministry's knowledge.

Johnson, however, said the then lands ministry permanent secretary Peter Amutenya had permitted them.

Desert Lion ceases ops

On 31 August 2019, Desert Lion Energy announced that they were ceasing all mining operations in Namibia due to a slump in lithium prices.

The statement read: “Namibian lithium developer and emerging lithium concentrate producer Desert Lion Energy Inc. today [31 August] announced that it has ceased all operations in Namibia in light of the continued decline in lithium carbonate pricing. 

The Board is currently re-assessing the previously announced 3-stage execution plan and is evaluating all available options to find a sustainable path to the continued development of its Namibian Lithium Project.”

Lepidico acquires Karibib Lithium project

On 27 June 2019, Desert Lion Energy directors approved the deal where Lepidico Ltd acquired 80% of the Karibib Lithium project.

Lepidico acquired all of the outstanding common shares of Desert Lion for consideration of 5.4 Lepidico ordinary shares for every one Desert Lion common share. 

Lepidoco issued 571,157,062 new fully paid ordinary shares to existing Desert Lion shareholders; 39,183,982 new options at exercise prices ranging from US$0.02 – US$0.35; and 139,797,500 warrants at exercise prices ranging from Us$0.04 to US$0.044.

Lepidico also issued 76,020,767 new fully paid ordinary shares to certain creditors of Desert Lion in settlement of debt arrangements, which Desert Lion had intended to settle in common shares at the time of the announcement of the arrangement, but which had not been allotted at transaction close.