Australian lithium mining company Pilbara Minerals has entered into a binding scheme implementation agreement (SIA) with Latin Resources to acquire the latter in an all-share transaction worth valued at approximately A$559.9m ($370m).
Under the terms of the SIA, Latin Resources’ shareholders will receive 0.07 new Pilbara Minerals shares for each Latin Resources share they hold.
The consideration represents a premium of 57% to Latin Resources’ 10-day volume-weighted average price (VWAP) of A$0.127 ($0.084) per share.
Following the completion of the deal, Latin Resources shareholders will hold around 6.4% of Pilbara Minerals’ shares.
The acquisition will enable Pilbara Minerals to gain control of Latin Resources’ Salinas lithium project, located in the mining jurisdiction of Minas Gerais, Brazil. The project is said to have the potential to become a top 10 hard rock lithium operation globally by production.
Last year, Latin Resources released a preliminary economic assessment (PEA) for the Brazilian lithium project. It delineated the potential for developing the Salinas project in two stages.
The project is expected to deliver an average annual spodumene concentrate production of about 499,000 tonnes over an initial mine life of 11 years.
Currently, Latin Resources is advancing the definitive feasibility study (DFS) for the Salinas lithium project, which is scheduled to be completed by the end of the September quarter of 2024.
Once the DFS is completed and ongoing stage 1 fast-tracked permitting is finalised, Pilbara Minerals has the option to consider a final investment decision (FID) for the lithium project.
Pilbara Minerals managing director and CEO Dale Henderson said: “This acquisition is on-strategy, diversifying the business with what we believe is a counter-cyclical, accretive extension that further builds out Pilbara Minerals’ position as one of the leading lithium materials suppliers globally.
“The acquisition will deliver our second 100% owned, Tier 1, hard rock lithium asset, which is expected to be low-cost and accretive for our shareholders. It provides Pilbara Minerals with optionality to sequence new supply and diversify into new growth markets for lithium such as Europe and North America.”
For Latin Resources, the transaction offers shareholders an immediate premium and will unlock the Salinas project’s value by reducing funding and development risks, by leveraging Pilbara Minerals’ expertise.
Latin Resources managing director Chris Gale said: “I am extremely excited and proud that our achievements in Brazil have attracted such a high quality company in Pilbara Minerals to Salinas.
“I have spent time at Pilbara Minerals’ Pilgangoora mine, met with the Pilbara Minerals team and I’m in no doubt that Pilbara Minerals’ expertise’ in lithium mining will be an enormous benefit not only to Latin Resources and its 100%-owned Brazilian subsidiary, Belo Lithium, but to Brazil itself.”
The scheme is expected to be implemented in late November or early December 2024, following approval by Latin Resources shareholders and the court.
