8-K: Constellation SPAC to Merge with HiTech Minerals, Forming US Elemental

Constellation Acquisition Corp I announces a non-binding term sheet for a business combination with HiTech Minerals, Inc., a Jindalee Lithium subsidiary, to form US Elemental, focusing on the McDermitt Lithium Project.

Summary

• Constellation Acquisition Corp I (CSTAF) has entered into a non-binding term sheet for a business combination with HiTech Minerals, Inc., a wholly-owned subsidiary of Jindalee Lithium Limited (ASX:JLL).
• The proposed transaction will create a new U.S. listed company, US Elemental, which will focus on developing the McDermitt Lithium Project.
• US Elemental is intended to list on a national U.S. securities exchange (Nasdaq or NYSE).
• Jindalee Lithium is expected to retain at least 80% ownership of US Elemental post-transaction, maintaining majority control.
• The transaction contemplates a target valuation of $500 million and a capital raise of $20-30 million, with $4 million committed by affiliates of Antarctica Capital.
• The pro forma balance sheet is expected to have $15 million in net cash after transaction expenses.
• The McDermitt Lithium Project, located in the McDermitt Caldera (Oregon/Nevada), is identified as a Tier 1 U.S. lithium resource with 21.5 Mt LCE (Mineral Resource Estimate 2023) and 2.34 Mt LCE (Ore Reserve Estimate 2024).
• A Pre-Feasibility Study (PFS) completed in November 2024 indicates a 63-year project life, with a post-tax NPV (8%) of $3.23 billion and an IRR of 17.9%.
• The project is expected to produce 47,500 tonnes per annum (tpa) of lithium carbonate equivalent (LCE) for the first 10 years, with an estimated EBITDA margin of 66% over that period and an operating cash cost of $8,080/t LCE.
• The McDermitt Project has received FAST-41 designation, recognizing its strategic importance to U.S. critical minerals supply, and has a partnership with the Department of Energy (DOE) for process optimization.
• The Exploration Plan of Operations (EPO) for the McDermitt Project was approved on December 8, 2025.

Sentiment

Score: 7

Explanation: The filing presents a positive outlook for the McDermitt Lithium Project, highlighting strong economics from the PFS, strategic U.S. government support, and a clear path to commercialization through the SPAC merger. However, the project is still in the development stage, and the financial figures are based on a PFS, which introduces inherent uncertainties and risks, particularly regarding funding and the novel sediment-hosted deposit type. The comprehensive risk disclosure balances the positive aspects.

Positives

• The McDermitt Lithium Project is a large-scale, potentially globally significant U.S. lithium resource with 21.5 Mt LCE contained resource and a 63-year project life.
• The Pre-Feasibility Study (PFS) shows strong economics with a post-tax NPV (8%) of $3.23 billion and a post-tax IRR of 17.9%.
• The project is expected to have a high EBITDA margin of 66% over the first 10 years of production and an operating cash cost of $8,080/t LCE, placing it in the bottom half of the cost curve.
• The project has received FAST-41 designation, indicating U.S. government recognition and support for streamlining permitting and advancing domestic critical mineral supply.
• A partnership with the U.S. Department of Energy (DOE) is in place for process optimization, potentially enhancing efficiency and reducing costs.
• The potential for magnesium as a strategic by-product could provide additional revenue streams and contribute to U.S. domestic primary magnesium supply.
• The proposed business combination and U.S. listing of US Elemental are expected to unlock direct access to U.S. institutional investors and enhance policy momentum.
• Jindalee Lithium will retain over 80% ownership of US Elemental, maintaining significant control over the asset.
• The current development timeline is expected to align first lithium carbonate production with substantial global supply deficits forecasted for the early 2030s.
• The Exploration Plan of Operations (EPO) was approved on December 8, 2025, marking a significant permitting milestone.

Negatives

• The McDermitt Project is still in the development stage, with no guarantees that it will reach commercial extraction or generate profits in the short, medium, or long term.
• The economic viability is currently based on a preliminary feasibility study (PFS), which has a lower level of confidence than a definitive feasibility study (DFS).
• The PFS estimates require significant construction capital of $3.02 billion, and there is no certainty that the required funding will be raised when needed, potentially leading to highly dilutive terms.
• The company has a limited operating history in the mining, energy, and resources sector, making future performance difficult to evaluate.
• The McDermitt Lithium Project is a sediment-hosted lithium deposit, and there are currently no commercially operating lithium sediment mines anywhere in the world, introducing technical uncertainty regarding scalability to commercial production.
• The proposed business combination is based on a non-binding term sheet, and there is no assurance that a definitive agreement will be entered into or consummated.

Risks

• No guarantee that development of the project into a mine will occur or result in commercial extraction of mineral deposits.
• Uncertainty regarding the delivery of a definitive feasibility study (DFS) that supports economic viability or that assumptions (e.g., lithium carbonate prices) will remain true.
• Limited operating history in the mining, energy, and resources sector, including battery metals industry, making future performance difficult to evaluate.
• Long-term success depends on continued growth in lithium demand and lithium-ion batteries.
• Development and adoption of new battery technologies not reliant on lithium could significantly impact prospects.
• Inability to negotiate and enter into sales agreements with third-party customers on commercially viable terms.
• Exchange rate fluctuations may materially affect results of operations and financial condition.
• Dependence on ability to successfully access capital and financial markets for future funding; inability could limit operations and growth.
• Changes in technology or other developments could adversely affect demand for lithium compounds or result in preferences for substitute products.
• Success largely depends on the market price of lithium remaining higher than future production costs.
• Mining exploration and development projects are high risk and subject to uncertainties; mineral resource estimates may differ from ultimately recovered quantities.
• The industry is subject to domestic and global competition, over which the company has no control.
• Failure to retain key personnel or attract additional qualified personnel could hinder growth.
• Improper management of growth could have a material adverse effect on business.
• Land reclamation and mine closure may be burdensome and costly.
• Success depends on developing and maintaining relationships with local communities and stakeholders.
• Exposure to general economic conditions and fluctuations of interest and inflation rates.
• Business may be adversely affected by force majeure events (labor unrest, civil disorder, war, extreme weather, etc.).
• Receipt of federal monies could lead to additional federal regulations, delaying timing and increasing costs.
• Requirement to obtain governmental permits and approvals, which is costly and time-consuming, with no certainty of approval.
• Failure to comply with anti-corruption, anti-bribery, anti-money laundering laws could negatively impact reputation.
• Operations are subject to environmental, health, and safety regulations, imposing costs and potential liabilities.
• Impacts of climate change may adversely affect operations or increase compliance costs.
• Opposition from organizations that oppose mining may disrupt or delay projects.
• Requirements of being a U.S. public company may strain resources and divert management's attention, increasing expenses.
• Business could be adversely affected by trade tariffs or other trade barriers.
• Exposure to possible litigation risks, including mining permit disputes, environmental claims, and employee claims.
• Mining operations may be disrupted by various risks and hazards, affecting operating costs and financial condition.
• Occurrence of significant events not fully insured could have a material adverse effect.
• Threat of global economic, capital markets, and credit disruptions.
• Failure to protect intellectual property rights may undermine competitive position; litigation may be costly.
• Need to defend against claims of infringing intellectual property rights of others.
• Unauthorized access to, disclosure, or theft of personal information could harm reputation.
• Failure of information technology and data security infrastructure could adversely affect business.
• Actual capital costs, operating costs, production, and economic returns may differ significantly from anticipated.
• Resource estimates may change significantly with new information or techniques, potentially reducing resources or altering plans.
• Requirement to negotiate access arrangements and pay compensation to land owners, which may negatively impact success.
• Ability to gain access to tenures or progress from exploration to development/mining phases may be adversely affected by indigenous land rights.
• The McDermitt Lithium Project is a sediment-hosted deposit, with no commercially operating lithium sediment mines globally, posing risks to economic viability and scalability of production.
• Constellation, Jindalee, the Company, and NewCo may not enter into a binding or definitive agreement for the Potential Business Combination.
• Jindalee shareholders must approve the transaction, and there is no guarantee such approval will be obtained.
• The Sponsor and certain Constellation shareholders have agreed to vote in favor, regardless of public shareholder votes.
• Constellation's Board has potential conflicts of interest in recommending the business combination.
• Shareholders will experience dilution as a consequence of the Potential Business Combination.
• Future resales of NewCo's shares may cause the market price to drop significantly.
• No assurance that NewCo's or Constellation's stock price will not decline or be volatile.
• Redemption rights of Constellation's public shareholders could limit NewCo's public float.
• Business uncertainties and contractual restrictions once documentation for the Potential Business Combination is executed.
• Constellation's due diligence review may not have identified all material issues or risks.
• No assurance that NewCo will comply with Nasdaq listing standards or that an active and liquid public market will develop.
• If analysts cease publishing research or change recommendations adversely, NewCo's share price and trading volume could decline.
• NewCo may be unable to obtain additional financing.
• Constellation and NewCo's status as emerging growth companies may make their securities less attractive to investors.
• Significant transaction costs will be incurred.
• A small number of shareholders will own a substantial majority of shares, giving them material influence.
• Constellation's sponsor and affiliates may purchase Class A ordinary shares from public shareholders, reducing public float.

Future Outlook

The company anticipates that the McDermitt Project's development timeline will align its first lithium carbonate production with substantial global supply deficits projected for the early 2030s. Future operations include advanced technical, engineering, and economic studies, a Definitive Feasibility Study (2026-2027), permitting (2026-2028), financing and project approval (2027-2029), and project execution, commissioning, and production (2028-2031). There is also an expectation of potential magnesium by-product exposure and continued process optimization through the DOE partnership.

Management Comments

• The McDermitt Project is well-positioned as a Tier 1 U.S. Lithium Resource, aligned with U.S. Government Critical Minerals Priority.
• The current development timeline is expected to align US Elemental's first lithium carbonate production with substantial supply deficits forecasted for the early 2030s.
• The US Elemental McDermitt Project offers a strategic opportunity for investors and partners to capitalize on the global pivot toward localized critical mineral supply chains.

Industry Context

The announcement comes amidst a strong U.S. drive to secure domestic lithium supply, with China controlling a significant majority of global lithium processing and battery production. U.S. dependence on imported lithium batteries is considered a national security vulnerability, leading to surging demand for U.S. lithium (projected to surge nearly 487% by 2030). Government initiatives like FAST-41 and substantial DOE funding for domestic battery manufacturing facilities are accelerating growth in the U.S. lithium sector. The market expects a global lithium supply deficit from 2026, supporting higher prices and increased investor demand for U.S. critical minerals exposure, further fueled by AI's power surge and data centers' increasing reliance on lithium-ion battery storage.

Comparison to Industry Standards

• The McDermitt Project's PFS (November 2024) indicates a post-tax NPV (8%) of $3.229 billion and an IRR of 17.9%, compared to Lithium Americas' Thacker Pass (January 2025 update) Phase 1 with an NPV (8%) of $8.691 billion and an IRR of 20.0%.
• McDermitt's estimated operating cash cost is $8,673/t LCE, slightly higher than Thacker Pass's $8,039/t LCE.
• McDermitt projects an average lithium carbonate production capacity of 43.8 ktpa (47.5 ktpa capacity) over its economic evaluation period, while Thacker Pass Phase 1 targets 40 ktpa (with a maximum capacity of 160 ktpa across all phases).
• McDermitt has a contained resource of 21.5 Mt LCE and reserves of 2.34 Mt LCE, significantly smaller than Thacker Pass's 66.1 Mt LCE resource and 14.3 Mt LCE reserves.
• In terms of valuation, US Elemental (McDermitt Project) has an EV/Mt LCE of 26.7x, which is lower than Lithium Americas (Thacker Pass) at 43.8x and significantly lower than Ioneer (Rhyolite Ridge) at 148.9x.
• The McDermitt Project's ~82% discount to NAV is comparable to Ioneer's 84.9% but higher than Lithium Americas' 67.0%, suggesting a potentially attractive entry point relative to its NPV.

Stakeholder Impact

• **Shareholders (Constellation)**: Will experience dilution as a consequence of the Potential Business Combination and will vote on the transaction. The Sponsor and certain affiliates have agreed to vote in favor, potentially differing from public shareholders' interests.
• **Shareholders (Jindalee Lithium)**: Expected to retain at least 80% ownership of US Elemental, maintaining majority control. Will need to approve the transaction.
• **Investors (NewCo)**: Offered an attractive entry point into a high-quality lithium asset with significant upside, but also exposed to risks associated with a development-stage project and the SPAC transaction.
• **Employees**: Potential for new employment opportunities as the McDermitt Project advances to development and production.
• **Local Communities**: The project's success depends on developing and maintaining relationships with local communities and stakeholders. Environmental baseline studies are underway, and the project is subject to environmental regulations.
• **U.S. Government**: The project aligns with critical minerals priorities, has FAST-41 designation, and a DOE partnership, contributing to domestic lithium supply and national security.
• **Creditors/Suppliers**: Potential for future business relationships as the project requires significant construction capital and ongoing operational supplies and services.

Next Steps

• Finalize and execute a binding definitive agreement for the Potential Business Combination.
• Prepare and file a registration statement on Form S-4 with the SEC by NewCo.
• Obtain necessary regulatory and governmental approvals for the business combination.
• Secure approval from Jindalee Lithium shareholders for the transaction.
• Conduct SK-1300 & Selection Studies (2026).
• Complete a Definitive Feasibility Study (2026-2027).
• Advance permitting processes, including the Plan of Operations (2026-2028).
• Secure financing and project approval (2027-2029).
• Proceed with project execution, commissioning, and production (2028-2031).
• Continue advanced metallurgical and pilot plant testing to confirm process assumptions and costs.
• Perform infill drilling to increase measured reserves and support detailed mine and process plan development.
• Complete advanced engineering for power, water supply, and non-process infrastructure.
• Finalize reclamation and closure plans.
• Conduct detailed supporting studies on labor, procurement, supply chain, and community development.
• Complete environmental, water, and wildlife studies and collect geochemical, geotechnical, and hydrological data.
• Conduct social, community, and economic baseline studies to support EIS preparation.
• Evaluate potential for valuable Magnesium byproduct and optimize flowsheet, water, power, and infrastructure location.

Key Dates

Recommendation

The filing outlines a significant strategic move for Constellation Acquisition Corp I and Jindalee Lithium, positioning the McDermitt Project as a key domestic lithium asset. The Pre-Feasibility Study results are robust, and the project benefits from strong U.S. government support and favorable industry tailwinds for lithium demand. However, the project is still in the development phase, with substantial capital requirements and inherent risks associated with a sediment-hosted deposit type that lacks commercial operating precedents. The transaction is currently based on a non-binding term sheet, and the capital raise is relatively modest compared to the project's overall funding needs. While the long-term potential is significant, the immediate investment decision should be approached with caution due to the early stage of development and execution risks. A 'hold' recommendation is appropriate, awaiting further clarity from the Definitive Feasibility Study, successful capital raising, and the finalization of the business combination.

Keywords

Lithium, McDermitt Project, SPAC, Business Combination, Critical Minerals, US Elemental, Jindalee Lithium, Constellation Acquisition Corp I, HiTech Minerals, Battery Metals, Nevada, Oregon, FAST-41, DOE Partnership, Pre-Feasibility Study, Mining, Resource Estimate, Capital Raise, Corporate Governance, SEC Filing