425: Stardust Power Aims to Revolutionize U.S. Lithium Production Through GPAC II Merger

Stardust Power plans to become a publicly traded company via a merger with Global Partner Acquisition Corp II (GPAC II) to establish a large central lithium refinery in Oklahoma and contribute to U.S. energy independence.

Summary

• Stardust Power is merging with Global Partner Acquisition Corp II (GPAC II) to become a public company.
• The company aims to address the critical gap in the U.S. lithium supply chain by building a large central refinery.
• The refinery will be located in Port Muskogee, Oklahoma, and is expected to create over 500 jobs.
• The CapEx for the project is estimated at $1 to $1.2 billion, making it the largest private development in Oklahoma's history.
• Stardust Power plans to use proven chemical conversion technology for its refinery and direct lithium extraction (DLE) for feedstock sourcing.
• The company aims to source materials from the U.S. or I.R.A./FTA compliant countries to mitigate geopolitical risks.
• The refinery is designed with sustainability in mind, including all-electric lines, zero liquid discharge technology, and reliance on Oklahoma's sustainable power grid.
• Stardust Power seeks to finance the project through non-dilutive capital sources, such as bank financing, government grants, and prepayment facilities.
• The company has secured over 35,000 acres of resource following the merger announcement.
• The Department of Commerce has analyzed up to $257 million in incentives to develop the facility in Oklahoma.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for Stardust Power, highlighting its strategic position in the lithium supply chain, commitment to sustainability, and access to funding. The management's comments and the company's plans suggest a high degree of confidence in its future prospects.

Positives

• Addresses a critical gap in the U.S. lithium supply chain by focusing on refining capacity.
• Vertically integrated approach through aggregation of upstream supply sources.
• Strategic location in Oklahoma with access to major transportation infrastructure and a skilled workforce.
• Commitment to sustainability through the use of DLE technology, all-electric lines, and zero liquid discharge.
• Potential for significant job creation and economic growth in Oklahoma.
• Access to non-dilutive capital sources, including government grants and bank financing.
• Strong support from the U.S. government through policies and incentives.
• GPAC II's SPAC structure is efficient with low warrant coverage and no IPO investment banking fees.

Negatives

• The project requires significant CapEx of $1 to $1.2 billion.
• Reliance on government grants and incentives, which may be subject to change.
• Dependence on successful direct lithium extraction (DLE) technology, which carries some risk.
• The company is subject to risks and uncertainties related to the business combination, including regulatory approvals and shareholder approval.

Risks

• The proposed business combination may not be completed in a timely manner or at all.
• Failure to satisfy the conditions to the consummation of the proposed business combination.
• Changes to the proposed structure of the business combination may be required.
• Inability to raise additional funds through a private placement or equity or debt raise.
• The anticipated growth of the Lithium industry may not be achieved.
• Volatility resulting from changes in the competitive and highly regulated industries in which Stardust Power plans to operate.
• The impact of the global COVID-19 pandemic.

Future Outlook

Stardust Power aims to become a key player in the U.S. lithium supply chain, contributing to energy independence and the electric vehicle transition. The company plans to leverage non-dilutive capital sources and government support to build its refinery and secure upstream supply.

Management Comments

• Roshan Pujari: 'We started looking at the lithium space at Vikasa Capital, at around 2018.'
• Roshan Pujari: 'The critical gap in the supply chain is refining capacity, which China controls.'
• Roshan Pujari: 'We saw it as an opportunity to aggregate supply upstream for a vertically integrated approach.'
• Roshan Pujari: 'As a manufacturer of battery grade lithium products, we see Stardust Power as essential to America and the global energy transition.'

Industry Context

The announcement comes amid growing global demand for lithium-ion batteries and increasing concerns about the concentration of refining capacity in China. Stardust Power's project aligns with the U.S. government's efforts to onshore critical material supply chains and reduce reliance on foreign sources.

Comparison to Industry Standards

• The plan to build a large central refinery is similar to projects undertaken by companies like Albemarle and Livent, who are major players in the lithium industry.
• The use of DLE technology aligns with industry trends towards more sustainable and environmentally friendly lithium extraction methods, as opposed to traditional evaporation ponds used in South America.
• The focus on securing non-dilutive capital is a common strategy among junior miners and resource companies to minimize shareholder dilution during the development phase.
• The project's scale, with a CapEx of $1 to $1.2 billion, is comparable to other large-scale lithium refining projects globally.

Stakeholder Impact

• Shareholders: Potential for value creation through the growth of Stardust Power and its role in the lithium market.
• Employees: Creation of over 500 jobs in Oklahoma.
• Customers: Access to a reliable and sustainable source of battery-grade lithium products.
• Suppliers: Opportunities to participate in the U.S. lithium supply chain.
• Creditors: Potential for investment and financing opportunities in a growing industry.

Next Steps

• Obtain shareholder approval for the proposed business combination.
• Satisfy the minimum trust account amount following redemptions by GPAC II's public shareholders.
• Receive certain governmental and regulatory approvals.
• Implement business plans and forecasts after the completion of the proposed business combination.
• Identify and realize additional opportunities in the lithium market.

Key Dates