Lithium, Mineral Resources, News, Takeover bids

MinRes stifles IGO’s lithium takeover

Mineral Resources (MinRes) has derailed a takeover attempt by IGO and Tianqi.

Tianqi and IGO attempted a $136 million takeover of Essential Metals to bolster both companies’ lithium portfolios.

The scheme of arrangement was first lodged in January, with an offer price of 50 cents per share which experts at the Australian Financial Review deemed fair and reasonable.

The offer was enough to move Essential’s board, who advised shareholders to accept the deal.

But the atmosphere shifted when MinRes announced that it had quietly scooped up a 19.5 per cent stake in Essential, which it used to vote against the deal.

Essential shares rose to 58 cents – well above the offer price – and speculation of a higher offer arose.

Only 31.5 per cent of shareholders voted in favour of the takeover, falling well short of the 75 per cent threshold.

This morning, Essential terminated its scheme implementation arrangement with IGO and Tianqi, meaning the company is now free to engage with other parties, such as MinRes, about potential offers.

“Essential would like to welcome the MinRes group of companies as a major shareholder with 19.55 per cent of the issues shares in Essential,” the company said in an ASX announcement.

Essential chairman Craig McGown commented.

“Our Pioneer Dome lithium project is primed for development and the company is extremely well placed to considewr future strategic opportunities,” he said.

Essential Metals has been drilling Pioneer Dome, an early-stage lithium deposit that is currently years from development.

Pioneer Dome is located about 600km from Greenbushes, Australia’s biggest and best lithium mine in which IGO and Tianqi have a 51 per cent stake.

Greenbushes is expected to run for at least another 20 years, suggesting IGO and Tianqi’s acquisition confirms their desire to push into a new lithium province rather than simply extending the existing hub.

The two companies also jointly own one of Australia’s few lithium hydroxide processing plants at Kwinana.

MinRes may have its own interest in Pioneer Dome. MinRes jointly owns the Mt Marion lithium mine, which lies only 75km north of Pioneer Dome. AFR experts speculate that MinRes’ sudden intervention in the takeover may suggest the company is planning its own lithium expansion.

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