Australia’s Pilbara Minerals on Thursday announced the acquisition of fellow ASX-listed Latin Resources. The all-share deal will deliver Pilbara its second, 100%-owned tier-one, hard-rock lithium asset – the Salinas project in Minas Gerais, Brazil.
Latin shareholders will receive 0.07 new Pilbara shares for each Latin share held. Based on Pilbara’s closing share price of A$2.85 a share on Wednesday, the transaction implies a significant premium value of A$0.20 a Latin share.
“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,” said MD and CEO Dale Henderson.
He stated that Pilbara had assessed several projects globally, and that Salinas made the top of its list when benchmarked holistically against a range of key criteria.
“A comprehensive due diligence period has been conducted over the past six months which has built-out our understanding of the asset and the region’s potential. Importantly, the acquisition leverages Pilbara Minerals’ capability in hard rock lithium resource delineation, project development, operations and marketing experience,” said Henderson.
A preliminary economic assessment announced by Latin in September 2023, outlined the potential for Salinas to be developed in two stages to deliver combined average yearly spodumene concentrate production of about 499 000 t on a 5.2% lithium oxide basis over an initial mine life of 11 years.
Latin has also been progressing a definitive feasibility study for Salinas, which is expected to be completed by the end of the September quarter.
Latin MD Chris Gale said the transaction provided the company’s shareholders with an opportunity to become shareholders in the world’s largest pure-play hard-rock lithium producer.
“In addition to delivering an attractive premium, this transaction allows Latin Resources shareholders to retain ongoing, but significantly derisked, exposure to the development of Salinas as part of a larger, more diversified enterprise with a strong balance sheet, cashflow generation and technical expertise, all of which will support the successful development and operation of Salinas.”
The Latin board has unanimously recommended the scheme in the absence of a superior proposal. All of the directors have confirmed their intention to vote in favour of the scheme, and Latin’s biggest shareholder, José Luis Manzano, has confirmed his intention to vote his shares in favour of the scheme.
Gale has agreed to join Pilbara as a consultant for a period of 12 months to provide leadership continuity, with key stakeholders, including the Latin in-country team, senior government officials and local community representatives to progress key activities at Salinas.