Grounded Lithium Corp. ("GLC", "Grounded", or the "Company") announces we have entered into a definitive agreement dated December 30, 2025 (the "Purchase Agreement") to acquire (the "Acquisition") a minority interest in oil and gas mineral rights in Saskatchewan with the strategic rationale to supplement cash flow and working capital reserves as the Kindersley Lithium Project ("KLP") continues to advance with our partner, Denison Mines Corp ("Denison"). Under the Purchase Agreement, Grounded will remit approximately $25,000 in cash consideration to a related company and will receive a 30% mineral interest in approximately four sections located in south-central Saskatchewan near Lloydminster, an area with a history of low-risk, conventional, shallow, medium to heavy oil targets (the "Lands"). The related company, Analogy Capital Advisors Inc. ("Analogy Capital") is an entity co-owned and controlled by Mr. John D. Wright, Chairman of GLC. As such, the Acquisition is a non-arm's length transaction. Analogy Capital controls a 70% working interest in these sections, therefore, post-Acquisition, Analogy Capital will retain a 40% working interest in the Lands. The remaining 30% is owned by an unrelated third-party corporate entity (the "Third Party"). No finders fees were paid on the Acquisition.
As a second and immediate step, Grounded and the Third Party will farm-out (the "Farmout") their combined 60% interest to a newly created Limited Partnership, the Saskatchewan Renewal Drilling Limited Partnership #1 ("SRDLP"), which successfully raised $900,000 from various subscribers to invest in oil and gas opportunities. Key terms of the Farmout involve the recovery of capital by SRDLP through a share of net operating income ("NOI"). Until SRDLP has recovered its eligible capital and operating costs associated with various drilling activities, described in greater detail below, from its share of NOI ("Payout"), SRDLP will retain 95% of the 60% share of NOI. Post-Payout, this percentage will drop to 55% of NOI. From a Grounded perspective, we receive 1.5% of NOI pre-Payout and 13.5% of NOI post-Payout. Grounded will provide the operatorship of the drilling and production activities associated with the Lands. Time and effort spent managing oil and gas activities as the operator will be formalized through standard joint operating agreements and charged back to the SRDLP and Analogy Capital. under such agreements.
The combined group, comprised of Grounded, Analogy Capital and the Third Party has collectively agreed to drill up to two exploratory/development wells into a multiple zone Mannville sequence on the Lands. Wells drilled will be to a shallow depth of less than 700 meters, minimizing capital expenditures. The wells to be drilled offset older legacy wells which never produced but provide evidence supporting future success. It is anticipated that we may encounter up to three separate zones with oil potential. At these shallow depths and current commodity pricing, it is possible to drill, complete, equip and commence production from these wells, which could generate payback periods of less than one year. We believe the Lands can support wells beyond the two wells initially contemplated. Pending government well licensing approval, we anticipate operations to commence early in 2026.
The Acquisition constitutes a "related party transaction" as such term is defined in Multilateral Instrument 61-101 锟� Protection of Minority Security Holders in Special Transactions ("MI 61-101"). In completing the Acquisition, Grounded is relying on exemptions from the formal valuation and minority shareholder approval requirements set out in sections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as neither the fair market value of the interests acquired, nor the fair market value of the consideration therefore, exceeds 25% of Grounded's market capitalization.
"Grounded is opportunistically leveraging off our internal oil and gas technical expertise to diversify the resource portfolio of the Company and in doing so, provide a supplemental source of NOI to advance our interests in the KLP," stated Gregg Smith, President & CEO. "We see this low-risk oil and gas venture as complimentary to our lithium business. Post-Payout, we expect noteworthy cash flows which will be used to satisfy future working capital requirements, and, should this venture continue and grow, proceeds from it have the potential to fund, in part, our share of future joint venture commitments for the KLP. We fully appreciate our primary public purpose is to provide exposure to critical minerals, and that has not changed 锟� this transaction however provides more certainty that Grounded will have a material seat at the table as the KLP continues to advance through the various project execution states."
The Acquisition and the Farmout has been conditionally approved by the TSX Venture Exchange. Closing of the transaction is expected to occur pending minor filing requirements.