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The market dynamics for lithium are positive. Lithium demand has grown consistently over the past decade and is expected to accelerate significantly in the near term from increased consumption of lithium batteries, which are a critical component of hybrid and electric vehicles. 

The board of directors of both Talison and Salares unanimously support the proposed transaction. Salares management and directors (together representing 7.43% of Salares shares on a fully diluted basis) have agreed to enter into lock-up agreements to support the transaction.

Merger Proposal
Under the terms of the proposed transaction, which is to be structured as a plan of arrangement (“Plan of Arrangement”) under the British Columbia Business Corporations Act, it is anticipated that common shares of Salares will be exchanged for ordinary shares of Talison¹ on the basis of 2.81 Salares shares for one Talison share. All outstanding options and warrants of Salares will be assumed by Talison, and exercisable in accordance with their terms for Talison shares. 

Upon completion of the Plan of Arrangement, existing Salares and Talison shareholders will own 20% and 80%, respectively, of the combined company (on a fully diluted basis), prior to the conversion of the Subscription Receipts issued under the CAD$40 million Private Placement (as described below).
Vancouver’s Salares Lithium merging with Australian firm for world’s first pure-stock metal play

Talison Minerals and B.C. company hold properties in South America

 VANCOUVER, July 15, 2010 — Salares Lithium Inc. (TSXV: LIT) (“Salares”) and Talison Minerals Pty Ltd (“Talison”) are pleased to announce that they have executed a binding letter agreement (“Letter Agreement”) to combine their respective lithium assets and create the world’s largest, publicly traded lithium production and exploration company.  

Talison has been operating a hard-rock lithium mine in Australia for a quarter century and has a strong sales pipeline into China.Salares has several salt-lake properties in Chile that offer growth opportunities to Talison. South America is one of the world’s primary sources of lithium because of a substantial number of salt lakes from which lithium can be cost-effectively extracted.

 Immediate production expansions at Talison’s Australian operations are required to satisfy substantial growth in lithium demand from Chinese battery producers, for whom Talison is the primary supplier. This demand has been driven by government policies encouraging alternative energy vehicles in pursuit of energy security, reduced reliance on oil imports and environmental objectives. Additional large scale production expansion is also being pursued by Talison to meet the anticipated global growth in the lithium market. 

 Salares’ Chairman David Shaw said today: “The merger of Salares with Talison will create a unique lithium company with exposure to both lithium minerals and lithium brines, building on the strong foundation of both companies to continue growing and delivering value for shareholders.”

Talison Chairman Peter Robinson stated: “Talison is already the largest lithium producer in the world and the largest supplier of lithium concentrates into the growing Chinese market. The merger with Salares will offer shareholders exposure to substantial growth opportunities for the potential production of lithium carbonate from lithium brines as well as from lithium minerals, to satisfy the demand for lithium products destined for the global electric vehicle market.”  

The Boards of Salares and Talison believe the benefits of the merger are compelling, with:

• An attractive diversified mix of lithium mineral and brine assets in both Australia and Chile:
  • Combination of the high quality, low cost Australian based lithium minerals production with promising lithium brines exploration properties located in Chile;
• Multiple actionable growth strategies, including:
  • Expansion of existing lithium mineral production capacity by over 60% (currently in progress) to support the growing Chinese battery market, with demand from existing customers for over 90% of additional capacity;
  • Potential low cost lithium carbonate production from minerals conversion to supply major battery producers and vehicle manufacturers globally; and
  • Future potential lithium carbonate production from prospective Chilean brines;
• Access to an extensive global customer network, established over a 25-year lithium operations history, with the leading position in the growing Chinese battery market; and
• Board and management teams with complementary skills and extensive experience in the technical and commercial aspects of project development, production and marketing lithium.

 The market dynamics for lithium are positive. Lithium demand has grown consistently over the past decade and is expected to accelerate significantly in the near term from increased consumption of lithium batteries, which are a critical component of hybrid and electric vehicles. 

The board of directors of both Talison and Salares unanimously support the proposed transaction. Salares management and directors (together representing 7.43% of Salares shares on a fully diluted basis) have agreed to enter into lock-up agreements to support the transaction.

Merger Proposal
Under the terms of the proposed transaction, which is to be structured as a plan of arrangement (“Plan of Arrangement”) under the British Columbia Business Corporations Act, it is anticipated that common shares of Salares will be exchanged for ordinary shares of Talison¹ on the basis of 2.81 Salares shares for one Talison share. All outstanding options and warrants of Salares will be assumed by Talison, and exercisable in accordance with their terms for Talison shares. 

Upon completion of the Plan of Arrangement, existing Salares and Talison shareholders will own 20% and 80%, respectively, of the combined company (on a fully diluted basis), prior to the conversion of the Subscription Receipts issued under the CAD$40 million Private Placement (as described below).