The "Falcon Project" is a seven-processo lithium land package of roughly 1,354.89 ha in the Araçuaí / Itinga pegmatite district of Minas Gerais, Brazil. LTH today markets the cluster as its flagship Bandeira project. These are the same claims listed in Schedule "A" to Emerita's 11 December 2020 agency agreement (filed on SEDAR+ 13 January 2021).
| ANM processo | Local name | Current phase | Hectares | Note |
|---|---|---|---|---|
| ★ 832.439/2009 | Bandeira (flagship) | Requerimento de Lavra | 156.77 | LTH's principal deposit |
| 831.116/2016 | Itinga-01 | Autorização de Pesquisa | 15.79 | Sigma polygon dispute; cut to 9.77 ha by Portaria 479 (29 Jan 2024). Unresolved |
| 831.117/2016 | Itinga-02 | Requerimento de Lavra | 2.27 | |
| 831.118/2016 | Itinga-03 | Autorização de Pesquisa | 146.88 | |
| 831.119/2016 | Itinga-04 | Autorização de Pesquisa | 401.65 | Alvará 0928/2017, the processo named in the 1 Feb 2021 anuência prévia |
| 831.684/2016 | Itinga-05 | Autorização de Pesquisa | 325.66 | |
| 831.703/2016 | Itinga-06 | Autorização de Pesquisa | 305.87 | |
| Total land package | 1,354.89 | |||
The binding letter agreement of June 2016 itself has never been filed and is not held. What is held is Emerita's own repeated description of its terms, consistent across its continuous disclosure from 2016 to 2019. Four disclosed terms matter to everything that follows.
| Disclosed term | Emerita's own words |
|---|---|
| The trust clause | "Pursuant to the Agreement, Falcon will hold the Project in trust for Emerita until Emerita exercises the Option and the Project is assigned and transferred to Emerita. If Emerita does not exercise the Option by the Option Expiry Date, Falcon will retain the Project." This is the disclosure-side statement of the arrangement the OSC pleads at ¶10 and Emerita's claim pleads at ¶23(b). |
| The price | Three tranches of 500,000 common shares: June 2016 at $0.155 (to acquire the option), 28 August 2017 at $0.12 (to keep it in good standing), and 12 September 2018 at $0.04 (to exercise). Booked value CAD 157,500 in all; Emerita's claim puts it at "approximately CAD$157,000" (¶25). Emerita's filings name Falcon as recipient of all three; the OSC (¶11) and Emerita's claim (¶25) allege the third went at Diniz's direction to HFX Consultoria instead. The share register held by the transfer agent would settle it and is not public. |
| A retained royalty | "Falcon will retain a transferable 2% net smelter royalty on all commercial sales from the Litio Project." A vendor interest disclosed as surviving the exercise, and a live question for any valuation of what changed hands. |
| A resource payment | If a NI 43-101 mineral resource of at least 20 million tonnes at 1.3% LiO2 (as printed) were delineated, verified by a qualified person independent of both parties, with at least half indicated or measured, Emerita would owe Falcon a further CAD$5 million in cash or shares (the "Resource Consideration"). A contingent obligation that priced resource success into the original deal. |
Sources: EMO interim MD&A 26 August 2016; annual MD&A 27 January 2017 and 22 January 2018; interim MD&A 28 February 2018 and 25 May 2018; annual MD&A 29 January 2019, "Falcon Project - Description" (all SEDAR+); EMO audited annual financial statements FY2018. The royalty and Resource Consideration wording is from the FY2018 annual MD&A and appears in the same form from 2016. Quotations are verbatim from the filings named.
Why the third tranche's destination matters beyond the diversion allegation. On exercise, on Emerita's disclosed terms, the trust continued "until ... the Project is assigned and transferred to Emerita", and the assignment never happened. The same disclosure states that the applications for exploration permits "will be transferred to Emerita when the exploration permits are granted". Every account of what followed, including the vendor side's, has to start from the fact that Emerita paid the full disclosed price and the transfer step never occurred on any register.
The option's stated expiry date was 13 June 2018. The exercise came 12 September 2018, 91 days later. What sits between those dates is a change in Emerita's own disclosure wording, and it can be tracked filing by filing.
| Filing | The exercise sentence |
|---|---|
| Interim MD&A, 26 Aug 2016 | "In order to exercise the Option and acquire the Falcon Project, Emerita must issue a third tranche of 500,000 common shares to Falcon on or before the Option Expiry Date." Verbatim across five consecutive filings (the 2016 filing says "the Project"). Each also defines the Option Expiry Date as 13 June 2018, and none contains any extension language. |
| Annual MD&A, 27 Jan 2017 | |
| Annual MD&A, 22 Jan 2018 | |
| Interim MD&A, 28 Feb 2018 | |
| Interim MD&A, 25 May 2018 | |
| Interim MD&A, 29 Aug 2018 | "... on or before the Option Expiry Date, but can be extended subject to mutual agreement." The first periodic filing after the expiry date had passed. In the record searched, that phrase appears in this one document and in no other. |
| Date | Event | Gap |
|---|---|---|
| 13 Jun 2016 | Binding letter agreement announced; option exercisable "on or before June 13, 2018 (the Option Expiry Date)" | |
| 13 Jun 2018 | Stated Option Expiry Date. The standing disclosure consequence: "If Emerita does not exercise the Option by the Option Expiry Date, Falcon will retain the Project." | |
| 29 Aug 2018 | Interim MD&A adds "but can be extended subject to mutual agreement" | 77 days after expiry |
| 12 Sep 2018 | Third tranche issued at $0.04; "the Company exercised its option and acquired a 100% interest" | 91 days after expiry, 14 days after the wording change |
| 3 Oct 2018 | Emerita terminates its option on the Salobro zinc project (Vale S.A. / IMS), its cornerstone Brazilian asset, writing off CAD 2,272,408. From this date the Falcon Project was Emerita's only Brazilian project | 21 days after the exercise |
The audited record carries both dates without reconciling them. The FY2018 audited financial statements (29 January 2019, auditor UHY McGovern Hurley LLP) and the FY2018 annual MD&A each state the 13 June 2018 expiry definition and the 12 September 2018 exercise in the same document, with no extension described, no amendment dated, and no explanation of how an option stated to expire in June was exercised in September.
The ordinary explanation, stated with equal weight. The binding letter agreement itself is not held and was never filed. It may always have permitted extension by mutual agreement, with the earlier disclosure simply omitting that limb; on that reading the 29 August 2018 wording is a clarification, not a change of position. No amending or extension agreement is described by date anywhere in the record searched, but a private amendment would not appear on SEDAR. This sequence is therefore presented as a disclosure sequence, not as a lapse: the filings said one thing for five consecutive filings, added an extension limb only after the date had passed, and the one document that would settle the question is not public.
Why it matters to the accounts on the overview page. If the option had lapsed on its stated date, Falcon would have "retain[ed] the Project" on Emerita's own disclosed terms, and the later transfer to MGLIT would need no release letter at all; yet no party in the public record has advanced that position: Emerita's filings treated the exercise as valid, the third tranche was issued (its recipient is the disputed question), and the vendor side's own defence rests on a 2020 release, not a 2018 lapse. On every side's account, the option was validly exercised; the sequence above is what the disclosure record looks like underneath that shared premise. What would settle it: the binding letter agreement of 13 June 2016, any amendment to it, and the TSXV filing for the third-tranche issuance. None is public; all are listed in documents referred to but not held.
Sources: EMO interim MD&A 2016-08-26, 2018-02-28, 2018-05-25 and 2018-08-29; EMO annual MD&A 2017-01-27, 2018-01-22 and 2019-01-29; EMO audited annual financial statements FY2018 (2019-01-29), Note 5; FY2019 statements (Salobro write-off); EMO news releases 2016-06-13, 2017-09-12 and 2018-09-12 (Junior Mining Network archive). All SEDAR+ documents are cited by issuer and filing date and can be retrieved from sedarplus.ca.