Days after buying up 19.55 per cent of Essential Metals, Mineral Resources (MinRes) has voted against Tianqi Lithium Energy Australia’s (TLEA) takeover bid of the lithium junior.
This has felled the transaction in its current form and could even be an indication of MinRes’ own desire to acquire Essential Metals.
TLEA, which is a 51:49 joint venture between Tianqi Lithium and IGO, launched the bid in January and proposed to pay $0.50 per share for Essential Metals, equating to a $136 million equity value.
While $0.50-per-share was a 44.9 per cent premium to Essential’s share price of $0.345 on January 6, the company has been trading on or around the offer price since then.
Essential Metals owns the Pioneer Dome project, which is in the same district as MinRes’ Mt Marion lithium project. Pioneer Dome 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.
A February scoping study indicated a potential mine life of 7.3 years for Pioneer Dome, where an estimated 193,745 tonnes per annum of 5.7 per cent spodumene concentrate would be produced.
Essential Metals held a scheme meeting on Thursday to determine the way forward for TLEA’s transaction, where two requirements needed to be met.
The first requirement, where more than 50 per cent of shareholders had to vote in favour of the transaction, was passed, however the second requirement, where at least 75 per cent of the total votes had to be in favour of the transaction, was not.
And Essential made it clear that a particular shareholder may have swung the vote.
“It is noted that the voting trend changed significantly from 11 April as the Mineral Resources Limited group of companies purchased shares on-market and following its lodgement of notice of initial substantial holder on Friday 14 April,” the company said in a statement.
Essential said that it would come together with TLEA to determine what’s next for the takeover bid.
“The Essential board respects the wishes of the shareholders who voted against the scheme and will now engage with TLEA to determine the next steps in accordance with the scheme implementation agreement (SIA),” Essential chair Craig McGowan said.
“The company will provide a more fulsome update on its forward plans for the Pioneer Dome lithium project in due course, noting that whilst the SIA remains in place, the company cannot engage with potential strategic offtake partners and with Mineral Resources Limited, which recently acquired a 19.55 per cent stake in the company.
“Pioneer Dome is a strategic asset and one of few independently owned undeveloped lithium deposits in Australia. Following the recently completed scoping study, Essential believes that it remains in a strong position to unlock the value of this asset for its shareholders.”
Update: Essential Metals came out with a statement on Friday indicating that TLEA’s transaction had been terminated.
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