Lithium Australia launches takeover offer for Lepidico

Image: Lithium Australia

Activity in Australia’s emerging lithium industry continues to heat up with Lithium Australia unveiling plans for a $23.8 million takeover of explorer and developer Lepidico.

Lithium Australia, which is developing a new lithium extraction process known as Sileach, is targeting Lepidico at a time of rising demand for the mineral from Li-ion battery manufacturers, particularly in China.

Lepidico is also developing a lithium extraction technology – L-Max – which it says has the potential to commercially extract lithium and other by-products from unconventional sources, as Sileach plans to as well.

Additionally, both companies are involved in several lithium exploration and development prospects in Australia and internationally.

In an ASX announcement, Lithium Australia stated that a combined entity would offer a wide range of lithium technology solutions to match specific deposits. Managing director Adrian Griffin said the two companies have a similar business strategy, with excellent exploration projects and development prospects.

“It is the synergies in aspirations and assets that make combining the two companies the perfect opportunity for all shareholders. The combined entity is likely to be significantly more attractive for investors and financiers, as well as a global leader in lithium processing at a time of unprecedented lithium demand,” Griffin said.

The proposed conditional, off-market bid will involve one Lithium Australia share for every 13.25 shares of Lepidico. The bid represents a 13 per cent premium on the closing prices of both companies on the ASX on February 3, and a nine per cent premium on the 10-day volume weighted average price (VWAP).

A combined group would be the holder of one of the largest lithium exploration and development portfolios in the world, as well as hold multiple lithium processing technologies for treating both spodumene and mica mineralogies, Lithium Australia added.

Lepidico shareholders, with a combined 17.9 per cent stake in the company, have already agreed to accept the offer in the absence of a higher bid.

The two companies have been involved in court proceedings over the development of their extraction technologies.

In November 2016, Lithium Australia lodged an application with the Supreme Court of Western Australia, seeking a declaration that it had the right to exploit the Sileach process.

Lepidico countered this move by alleging that Lithium Australia was developing Sileach without authorisation and had exploited the intellectual property in its L-Max technology.

“The litigation relating to processing technology is distracting and expensive and although Lithium Australia is confident of a positive outcome, the time and resources currently dedicated to the legal processes would be better employed in advancing our projects and technologies in concert, and for the benefit of the shareholders of both companies,” Griffin said.

In 2016, Lepidico was also involved in a takeover when it was acquired by Platypus Minerals.