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Welcome to the Desert Lion Energy disclaimer. By visiting our website you are agreeing that you have read, are fully aware of, and are in agreement with this disclaimer.
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Desert Lion Energy
Suite 800, 65 Queen Street West
Toronto Ontario M5H 2M5, Canada
Third Party Information
This presentation includes market, industry and economic data which was obtained from various publicly available sources and other sources believed by Desert Lion to be true. Although Desert Lion believes it to be reliable, Desert Lion has not independently verified any of the data from third-party sources referred to in this presentation, or analyzed or verified the underlying reports relied upon or referred to by such sources, or ascertained the underlying economic and other assumptions relied upon by such sources. Desert Lion believes that its market, industry and economic data is accurate and that its estimates and assumptions are reasonable, but there can be no assurance as to the accuracy or completeness thereof and Desert Lion does not make any representation as to the accuracy of such information.
This presentation and its contents are confidential and proprietary to the Company and no part of it or its subject matter may be reproduced, redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person (as hereafter defined) or published in whole or in part for any purpose (collectively, “Disclose”) except as permitted hereby. The recipient of this presentation (the “Recipient”) by accepting this presentation hereby covenants with the Company that the Recipient: (i) shall maintain the information contained in this presentation (the “Confidential Information”) in the strictest confidence; and (ii) shall not, at any time, without the prior written consent of the Company, which consent may be unreasonably withheld, Disclose to any individual, firm, corporation, organization, government or government agency, or any other entity (collectively, “person”) this presentation or any Confidential Information. The Recipient further covenants that the Recipient and/or its representatives (as permitted by the Company) will not use the Confidential Information in any way detrimental to, or so as to obtain any commercial advantage over the Company. The Recipient agrees to be responsible for any breach of the covenants contained herein by the Recipient and/or its permitted representatives. The Recipient agrees to make all appropriate efforts to safeguard the Confidential Information from disclosure to any person other than as permitted hereby. If this presentation has been received in error then it must be returned immediately.
Cautionary Note Regarding Historical Technical Data
The reader is cautioned that the technical data contained herein is considered historical in nature as it is based on prior data and reports prepared by previous owners of the Project and specifically the reports entitled “Rubikon Dumps Mapping and Resource Calculation” and “Report on Tailings Dump Resources, Rubikon Mine”, each dated October 2014 and prepared by Phoenix Mineral Resources Ltd. for the previous owners of the Project. Reference is also made to the report entitled “NI 43-101 Technical Report on the Rubikon Lithium Exploration Project” dated November 26, 2016 prepared by Benzu Minerals (Pty) Ltd. The Company was not able to verify the quality assurance and quality control processes and methods used in compiling this historical technical data. While there can be no certainty that the historical technical data contained herein is accurate, the Company believes that the historical technical data is relevant to the overall potential of the Project as it may indicate the presence of lithium mineralization. As sufficient work to complete the classification of the mineralization on the Project as current mineral resources or mineral reserves has not been completed by the Company, the Company is not treating the historical technical data as current and does not have a current mineral resource or mineral reserve estimates in respect of the Project. This technical data cannot, therefore, be treated as compliant with National Instrument 43-101 – Standard of Disclosure for Mineral Projects and should not be relied upon.
Statutory Rights of Action
In certain circumstances, purchasers resident in certain provinces of Canada, are provided with a remedy for rescission or damages, or both, in addition to any other right they may have at law, where an offering memorandum (such as this presentation) and any amendment to it contains a misrepresentation. Where used herein, “misrepresentation” means an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make any statement not misleading in light of the circumstances in which it was made. These remedies, or notice with respect to these remedies, must be exercised or delivered, as the case may be, by the purchaser within the time limits prescribed by applicable securities legislation.
The following summary is subject to the express provisions of the applicable securities laws, regulations and rules, and reference is made thereto for the complete text of such provisions. Such provisions may contain limitations and statutory defences not described here on which the Company and other applicable parties may rely. Purchasers should refer to the applicable provisions of the securities legislation of their province for the particulars of these rights or consult with a legal adviser.
The following is a summary of rights of rescission or damages, or both, available to purchasers resident in the province of Ontario, New Brunswick, Nova Scotia and Saskatchewan. If there is a misrepresentation herein and you are a purchaser under securities legislation in Ontario, New Brunswick, Nova Scotia and Saskatchewan you have, without regard to whether you relied upon the misrepresentation, a statutory right of action for damages, or while still the owner of the securities, for rescission against the “Company”. This statutory right of action is subject to the following: (a) if you elect to exercise the right of action for rescission, you will have no right of action for damages against the Company; (b) except with respect to purchasers resident in Nova Scotia, no action shall be commenced to enforce a right of action for rescission after 180 days from the date of the transaction that gave rise to the cause of action; (c) no action shall be commenced to enforce a right of action for damages after the earlier of (i) 180 days (with respect to purchasers resident in Ontario) or one year (with respect to purchasers resident in Saskatchewan and New Brunswick) after you first had knowledge of the facts giving rise to the cause of action and (ii) three years (with respect to purchasers resident in Ontario) or six years (with respect to purchasers resident in Saskatchewan and New Brunswick) after the date of the transaction that gave rise to the cause of action; (d) with respect to purchasers resident in Nova Scotia, no action shall be commenced to enforce a right of action for rescission or damages after 120 days from the date on which payment for the securities was made by you; (e) the Company will not be liable if it proves that you purchased the securities with knowledge of the misrepresentation; (f) in the case of an action for damages, the Company will not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresentations; and (g) in no case will the amount recoverable in such action exceed the price at which the securities were sold to you. The foregoing is a summary only and is subject to the express provisions of the Securities Act (Ontario), the Securities Act (New Brunswick), the Securities Act (Nova Scotia) and the Securities Act (Saskatchewan), and the rules, regulations and other instruments thereunder, and reference is made to the complete text of such provisions contained therein. Such provisions may contain limitations and statutory defences on which the Company may rely.
In Manitoba, the Securities Act (Manitoba), in Newfoundland and Labrador the Securities Act (Newfoundland and Labrador), in Prince Edward Island the Securities Act (PEI), in Yukon, the Securities Act (Yukon), in Nunavut, the Securities Act (Nunavut) and in the Northwest Territories, the Securities Act (Northwest Territories) provide a statutory right of action for damages or rescission to purchasers resident in Manitoba, Newfoundland, PEI, Yukon, Nunavut and Northwest Territories respectively, in circumstances where this presentation or an amendment hereto contains a misrepresentation, which rights are similar, but not identical, to the rights available to Ontario purchasers.
The statutory right of action described above is in addition to and without derogation from any other right or remedy at law.
The securities offered in connection herewith are being offered on a private placement basis in reliance upon prospectus and registration exemptions under applicable securities legislation. Resale of the securities offered in connection herewith will be subject to restrictions under applicable securities legislation, which will vary depending on the relevant jurisdiction. Generally, such securities may be resold only pursuant to an exemption from the prospectus and registration requirements of applicable securities legislation or pursuant to an exemption order granted by appropriate securities regulatory authorities.
The operations of the Company are subject to significant uncertainty due to the high-risk nature of its business, which is the acquisition, financing, exploration, development and operation of mining properties. The following risk factors could materially affect the Company’s financial condition and/or future operating results and could cause actual events to differ materially from those described in forward-looking information relating to the Company.
Risks related to the Offering of Securities Generally
- There is currently no market through which the common shares of the Company (the “Common Shares”) may be sold and purchasers may not be able to resell the Common Shares. While the Company’s intends to complete a go-public transaction before the end of the third quarter of 2017, there is no assurance that the Common Shares will be admitted to a listing or qualified for distribution in Canada or any other jurisdiction.
- An investment in the Common Shares is highly speculative given the uncertain nature of the Company’s business and its present stage of development, and may result in the loss of an investor’s entire investment.
- The Company was formed on June 26, 2016, has not yet commenced commercial operations and has no assets other than the EPL. The Company has no history of earnings and will not generate earnings or pay dividends for the foreseeable future. The Company’s lack of operating history may make it difficult for investors to evaluate the Company’s prospects for success. There is no assurance that the Company will be successful and the likelihood of success must be considered in light of its relatively early stage of operations.
- The development of the business of the Company and its ability to execute on the opportunities described herein will depend, in part, upon the amount of additional financing available. Failure to obtain sufficient financing may result in delaying, scaling back, eliminating or indefinitely postponing the Company’s current or future operations. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be acceptable.
- Forward-looking information may prove inaccurate. Investors are cautioned not to place undue reliance on forward-looking information. By their nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking information or contribute to the possibility that predictions, forecasts or projections will prove to be materially inaccurate. Additional information on the risks, assumptions and uncertainties are found in this presentation under the heading “Cautionary Note Regarding Forward-Looking Information”.
Risks Related to the Company’s Business
- Lithium is considered an industrial mineral and the sales prices for the different lithium compounds are not public. Lithium is not a traded commodity like base and precious metals. Sales agreements are negotiated on an individual and private basis with each different end-user. In addition, there are a limited number of producers of lithium compounds and it is possible that these existing producers will try to prevent new-comers from entering the chain of supply by increasing their production capacity and lowering sales prices. Factors such as foreign currency fluctuation, supply and demand, industrial disruption and actual lithium market sale prices could have an adverse impact on operating costs and stock market prices and on the Company’s ability to fund its activities. In each case, the economics of the Project could be materially adversely affected, including to be rendered uneconomic.
- The mining industry is heavily dependent upon the market price of the metals or minerals being mined. There is no assurance that a profitable market will exist for the sale of the same. There can be no assurance that mineral prices will be such that the Company’s properties can be mined at a profit. The price of the Common Shares and the financial results of the Company, like its mining activities, could undergo in the future, important negative effects because of the fall of the prices of minerals, resulting in an impact on the capacity of the Company to finance its activities.
- The Company has not generated any revenues since incorporation and anticipates it will continue to have negative cash flow from operating activities in future periods until commercial production is achieved at the Project. Even if commercial operations are achieved at the Project, short-term operating factors relating to the lithium deposits, such as the need for orderly development of the deposits or the processing of new or different grades of ore, may cause any mining operation to be unprofitable in any particular accounting period.
- The exploration and development of the Project, and the construction of mining facilities and commencement of mining operations, will require substantial additional financing. As the Company does not have revenues, it is dependent upon future financings to continue its plan of operation. Failure to obtain sufficient financing will result in a delay or indefinite postponement of exploration, development or production on the Project. Additional financing may not be available when needed or if available, the terms of such financing may not be favourable to the Company and might involve substantial dilution to existing shareholders. Failure to raise capital when needed would have a material adverse effect on the Company’s business, financial condition and results of operations.
- The Company expects future mining operations at the Project to account for most or all of the Company’s ore production unless additional properties are brought into production or other producing properties are acquired. Any adverse condition affecting the Project could be expected to have a material adverse effect on the Company’s financial performance, results of operations and prospects.
- The acquisition and maintenance of title to mineral properties is a very detailed and time-consuming process. While the Company has reviewed and is satisfied with the title to the EPL, and, to the best of its knowledge, such title is in good standing, there is no guarantee that title to the EPL will not be challenged or impugned. Title insurance is generally not available for mineral properties and the Company’s ability to ensure that it has obtained secure mine tenure may be severely constrained. Third parties may have valid claims underlying portions of the Company’s interests, including prior unregistered liens, agreements, royalty transfers or claims, including native land claims, other encumbrances and title may be affected by, among other things, undetected defects.
- The mining industry is intensely and increasingly competitive, and the Company competes with many companies with greater financial resources and technical facilities than itself. Competition in the mining industry could adversely affect the Company’s ability to develop the Project.
- The Company is dependent upon a number of key management personnel. The Company’s ability to manage its operating, development, exploration and financing activities will depend in large part on the efforts of these individuals. As the Company’s business grows, it will require additional key financial, administrative, mining, marketing and public relations personnel as well as additional staff for operations. The Company faces intense competition for qualified personnel, and there can be no assurance that the Company will be able to attract and retain such personnel. The loss of the services of one or more key employees or the failure to attract and retain new personnel could have a material adverse effect on the Company’s ability to manage and expand the Company’s business.
- From time to time, the Company examines opportunities to acquire additional mining assets and businesses. Any acquisition that the Company may choose to complete may be of a significant size, may change the scale of the Company’s business and operations, and may expose the Company to new geographic, political, operating, financial and geological risks. The Company’s success in its acquisition activities depends on its ability to identify suitable acquisition candidates, negotiate acceptable terms for any such acquisition, and integrate the acquired operations successfully with those of the Company. Any acquisitions would be accompanied by risks. There can be no assurance that the Company would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.
- The development of the Project requires the construction of significant new facilities. The success of construction projects, plant expansions and the start-up of a new mine by the Company is subject to a number of risks and challenges including the availability and performance of engineering and construction contractors, suppliers and consultants, unforeseen geological formations, the implementation of new mining processes, the receipt of required governmental approvals and permits in connection with the construction of mining facilities and the conduct of mining operations, including environmental and operating permits, price escalation on all components of construction and start-up, engineering and mine design adjustments, the underlying characteristics, quality and unpredictability of the exact nature of mineralogy of a deposit and the consequent accurate understanding of ore or concentrate production, the successful completion and operation of haulage ramp and conveyors to move ore and other operational elements. Any delay in the performance of any one or more of the contractors, suppliers, consultants or other persons on which the Company is dependent in connection with its construction activities, a delay in or failure to receive the required governmental approvals and permits in a timely manner or on reasonable terms, or a delay in or failure in connection with the completion and successful operation of the operational elements in connection with the Project could delay or prevent the construction and start-up of the Project as planned and may result in additional costs being incurred by the Company beyond those budgeted. There can be no assurance that current or future construction and start-up plans implemented by the Company will be successful.
- The current operations of the Company and anticipated future operations, including exploration, development activities and commencement of production for the Project are subject to laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in exploration activities, and in the development and operation of mines and related facilities, generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permitting requirements. Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.
- The Company is subject to various laws and regulations governing the protection of the environment. Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas, which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a direction of stricter standards and enforcement, and higher fines and penalties for non-compliance. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations.
- The Company’s activities and operations require permits from various domestic authorities. There can be no assurance that various permits which the Company may require in the normal course for its current and anticipated exploration and development activities and mining operations, including without limitation, on the Project, will be obtainable on reasonable terms or on a timely basis or that such laws and regulations would not have an adverse effect on any mining project which the Company might undertake, including, without limitation, the Project. Furthermore, any delays in obtaining the anticipated construction permits in respect of the Project, would have an adverse effect on the Company’s timing and costs associated with start-up. Such delays could also allow other third-party projects to commence production before the Project, thereby potentially reducing the Company’s target market share, which would have an adverse impact on the level of product sales and economics of the Project.
- The business of exploration for minerals and mining involves a high degree of risk that even a combination of experience, knowledge and careful evaluation may not be able to overcome. Few properties that are explored are ultimately developed into mineral deposits with significant value. Unusual or unexpected ground or water conditions, geological formation pressures, fires, rock bursts, power outages, labour disruptions, flooding, earthquakes, explosions, cave-ins, landslides, mechanical equipment and facility performance problems, the inability to obtain suitable adequate machinery, equipment or labour and other unfavourable operating conditions are some of the risks involved in the operation of mines and the conduct of exploration and development programs. Unknown rock mechanics and hydrogeological conditions that cannot be predicted ahead of mining, such as faulting, zones of weak rock, or zones of unanticipated water inflow, may only be discovered during mining and may require significant changes to the mining plan. While lab testing may reduce uncertainty in some of the rock properties, it is never possible to identify all of these potential risks in advance. The Project and any future mining operations will be subject to all the hazards and risks normally incidental to exploration, development and production, any of which could result in work stoppages and damage to or destruction of exploration or development facilities, mines and other producing facilities, damage to life and property, environmental damage and possible legal liability for any or all damage.
- The mining industry is subject to significant risks that could result in damage to or destruction of property and facilities, personal injury or death, environmental damage and pollution, delays in production, expropriation of assets and loss of title to mining claims. No assurance can be given that insurance to cover the risks to which the Company’s activities are subject will be available at all or at commercially reasonable premiums.
- Certain of the directors and officers of the Company also serve as directors and/or officers of other companies involved in natural resource exploration and development and, consequently, there exists the possibility for such directors and officers to be in a position of conflict. The Company expects that any decision made by any of such directors and officers involving the Company will be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of the Company and its shareholders, but there can be no assurance in this regard.
- All industries, including the mining industry, are subject to legal claims, with and without merit. Legal proceedings may arise from time to time in the course of the Company’s business. Such litigation may be brought in the future against the Company or the Company may be subject to another form of litigation. Defense and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. As of the date hereof, no claims have been brought against the Company, nor has the Company received an indication that any claims are forthcoming. However, due to the inherent uncertainty of the litigation process, should a material claim be brought against the Company, the process of defending such claims could take away from the time and effort management of the Company would otherwise devote to its business operations and the resolution of any particular legal proceeding to which the Company may become subject could have a material adverse effect on the Company’s financial position and results of operations.