IGO and Tianqi Lithium Corporation (TLC) have snapped up Essential Metals and entered a new lithium district in the process.
Under their Tianqi Lithium Energy Australia umbrella (TLEA), the two companies have signed a binding scheme implementation agreement (SIA) with Essential Metals (ESS) to enact a scheme of arrangement.
The consideration for the scheme is $0.50 per share, equating to a $136 million equity value for Essential Metals.
The price represents a 44.9 per cent premium to Essential’s share price of $0.345 on January 6. Essential’s stock jumped to $0.48 on January 9 following the announcement.
If an Essential-commissioned independent review offers a favourable verdict for the proposal and no superior proposal ensues, the Essential board unanimously recommends its shareholders vote in favour of the scheme.
“We believe this transaction is a great outcome for Essential shareholders and for other stakeholders including employees, suppliers, the Ngadju people and the state of Western Australia, all of whom will benefit from the Pioneer Dome lithium project being developed by a large, well-financed and experienced lithium sector participant as is TLEA,” Essential managing director Tim Spencer said.
The Pioneer Dome project is located approximately 600km from TLEA’s Greenbushes lithium project, meaning this could be TLEA’s next lithium chess move.
Covering an area of 450 square kilometres, Pioneer Dome is located in a lithium district home to Mineral Resources’ Mt Marion lithium project, Alliance Minerals’ Bald Hill lithium project and Liontown Resources’ Buldania lithium project.
It is one of 14 JORC-compliant spodumene lithium resources in Australia, and has a mineral resource of 11.2 million tonnes at 1.16 per cent lithium oxide.
IGO acting chief executive officer Matt Dusci provided some insight into the proposal.
“Both IGO and TLC are committed to progressing and growing our lithium joint venture business,” he said. “The ESS transaction provides an opportunity to accelerate lithium exploration to bring new resources to production.”
TLEA, which is owned 51 per cent by Tianqi Lithium and 49 per cent by IGO, also owns the Kwinana lithium hydroxide refinery in WA.
The SIA is expected to be implemented in May 2023 following receipt of the necessary approvals.