News Summary
On December 8, 2025, Lithium South Development Corporation announced it has signed an acceptance letter for a definitive Share Purchase Agreement (SPA) with POSCO Argentina S.A.U. Under the agreement, Lithium South will sell its wholly-owned subsidiary, NRG Metals Argentina S.A., which holds the Hombre Muerto North Lithium Project, for US$65 million in cash.
Following the completion of the sale, the company intends to redeem all of its issued and outstanding common shares for an estimated price of CAD$0.505 per share. The company will then apply to delist from the TSX Venture Exchange and commence its dissolution.
The transaction is subject to several conditions, including approval by Lithium South shareholders, the court, and the TSX Venture Exchange. A special meeting of shareholders to vote on the transaction is scheduled for February 19, 2026, with a record date of January 5, 2026. The deal is anticipated to close on or about March 1, 2026.
Material Impact
This news is a definitive and game-changing event for Lithium South. It represents the culmination of a strategic process that began with a Letter of Intent (LOI) announced on July 30, 2025. The investment thesis has now completely shifted from a long-term, high-risk mineral exploration venture to a short-term, special situation arbitrage play.
A chronological review of the deal’s progression shows a positive outcome for shareholders:
– July 30, 2025: An LOI was signed with POSCO for a sale price of “up to US$62 million.”
– September – November 2025: The company provided updates on the successful completion of due diligence and internal approvals from POSCO.
– November 20, 2025: A brief extension to the agreement deadline was announced, which could have been a point of concern, but was quickly resolved.
– December 8, 2025: The definitive agreement is announced at US$65 million, an increase of US$3 million from the initial LOI price.
The proposed redemption price of CAD$0.505 per share represents a 14.8% premium to the last closing price of $0.44 (December 5, 2025). This spread reflects the time value of money until the expected closing in March 2026 and, more importantly, the inherent risks that the transaction may not be completed.
For existing shareholders, this provides a clear and relatively near-term liquidity event at a valuation that the market had not fully ascribed to the company prior to the initial LOI. The key risk has transitioned from exploration and development uncertainty to transaction execution risk.
Catalysts
The investment case is now entirely dependent on the successful closing of the transaction.
– Immediate: Watch for the stock to resume trading post-halt. The price should move towards, but remain slightly below, the C$0.505 redemption price to account for deal risk and timing.
– January 5, 2026: Record date for shareholders to be eligible to vote on the transaction.
– February 19, 2026: The Annual General and Special Meeting where shareholders will vote on the proposed sale. The outcome of this vote is the single most important catalyst.
– Post-Meeting: Monitor for announcements regarding court and TSX Venture Exchange approvals.
– March 1, 2026: The anticipated closing date of the transaction, followed by the redemption of shares and final payout to shareholders. Any deviation from this timeline is a key data point.
Materiality Conclusion
The announcement of a definitive agreement to sell the company’s core asset and subsequent liquidation is highly material. It provides a clear cash-out value for shareholders, effectively ending the company’s life as a going concern in exploration. The final sale price of US$65 million is an improvement on the initial LOI and offers a significant premium to the pre-deal stock price, solidifying this as a positive, game-changing event.
