SQM has announced its intention to buy lithium upstart Azure Minerals as the battle for lithium ground in Western Australia heats up.
A scheme of arrangement will see SQM acquire 100 per cent of Azure shares for $3.52 per share, while the Chilean lithium giant has simultaneously launched an off-market takeover comprising $3.50 per share should the scheme of arrangement not be successful.
The scheme consideration of $3.52 values Azure at $1.63 billion and represents a 44.3 per cent premium to Azure’s last closing price of $2.44 on Friday October 20 – the last business day before Azure entered a trading halt.
SQM’s offer is subject to limited conditions such as approval from the Foreign Investment Review Board (FIRB) but it is not subject to financing, due diligence or a minimum acceptance condition.
The transaction also has the unanimous recommendation of the Azure board in the absence of any superior proposal and subject to the endorsement of an independent expert.
Major Azure shareholder Delphi Group, which interestingly held out of accepting Genesis Minerals’ takeover bid for Dacian Gold, has given its support for the transaction.
Azure managing director Tony Rovira said SQM would be an ideal suitor to bring the promising Andover lithium project into production.
“Whilst we firmly believe that Andover has the potential to be a major lithium project, there is significant time, cost and risk associated with developing a project of this scale, particularly in the context of an uncertain broader economic outlook,” he said.
“As such, the board believes that the transaction provides Azure shareholders with a compelling opportunity to de-risk their investment and realise certain value at an attractive premium to historical trading levels.
“The transaction also presents a great outcome for other stakeholders in Andover, who will benefit from the project being developed by an experienced, well-capitalised and highly regarded company in SQM.”
SQM chief executive officer Ricardo Ramos echoed Rovira’s sentiment.
“SQM is Azure’s largest shareholder, with a shareholding of approximately 20 per cent and the Andover lithium project fits perfectly in with our lithium business portfolio,” he said.
“The expertise we have gained developing the Mount Holland lithium project, also located in Western Australia, along with more than 20 years in the lithium business, should enable us to successfully develop this project.”
SQM’s bid for Azure Minerals and its Andover project comes as major companies and mining magnates fight over promising lithium tenements in WA.
Bill Beament’s Develop Global, with the endorsement of Mineral Resources’ Chris Ellison, is well on its way to acquiring Essential Metals and its Pioneer Dome lithium project.
Albemarle was within a whisker of acquiring Liontown Resources and its advanced Kathleen Valley lithium project, before a late push from Gina Rinehart’s Hancock Prospecting to acquire a major shareholding in the company seemed to have disinterested the US lithium major.