Tawana to merge with Bald Hill lithium partner Alliance

The Bald Hill DMS plant in February

Bald Hill lithium project joint venture partners Tawana Resources and Alliance Mineral Assets are planning a merger to consolidate ownership of the Western Australian operation.

The JV, which was formed last year, launched spodumene concentrate production at the Eastern Goldfields site last month, just seven months after construction started.

Now the Bald Hill partners want to join forces to simplify the project’s ownership structure and operational management.

The proposed merger of equals will be executed by a scheme of arrangement where shareholders of both companies will hold around 50 per cent of the combined entity.

A merged company, which would trade on the Australian Securities Exchange (ASX) and the Singapore Exchange (SGX) Catalist board, would be valued at around $446 million.

The JV partners believe a merged company will be ideally positioned to become a sizeable producer of high-demand lithium concentrate. The boards of both companies have recommended the deal to shareholders.

Tawana chairman Robert Benussi described the two companies as an excellent and natural fit, given existing JV-owned assets and operational expertise.

“Both companies have successful track records of creating substantial value for shareholders and, together, we will retain this focus,” Benussi said.

“Our ability as a merged group to capture future growth opportunities in the high growth lithium market will be significantly enhanced.”

Bald Hill was moved into commissioning in February. Tawana also announced last month that it planned to spin-out three of its exploration assets into a new company in order to add focus on Bald Hill.

Alliance chairperson Pauline Gately said the company was pleased the JV it entered into with Tawana during 2017 had resulted in a merger proposal that made strategic sense.

“We are confident that merging the companies will result in significant benefits to both sets of shareholders with the opportunity for a re-rating for the merged group from the enhanced equity and capital markets profile,” Gately said.

It is proposed that Tawana managing director Mark Calderwood will continue in the role post-merger, with Mark Turner as non-executive chairman.

Tawana is also raising $20 million through a fully underwritten share placement to provide funds for the ongoing commissioning of Bald Hill, as well as for other activities associated with the property.

Alliance, meanwhile, is also raising funds, with the company securing a fully underwritten placement for $25 million.

Tawana may also raise an additional $5 million through a non-underwritten placement that is conditional on Alliance also raising a further $7.9 million in a conditional placement of its own.

The Bald Hill project has an indicated and inferred mineral resource estimate of 18.9 million tonnes (Mt) at 1.18 per cent Li2O and 149ppm Ta2O5 at a 0.5 per cent Li2O cut-off.