Pilbara Minerals’ $247m bid for Altura project could spark lithium M&A

Some lenders to Altura Mining (ASX:AJM) have entered into an agreement with Pilbara Minerals (ASX:PLS) allowing it to acquire Altura’s lithium operation in WA for $US175m ($247.8m) (reports Stockhead)
30th October 2020
Resources Rising Stars

Some lenders to Altura Mining (ASX:AJM) have entered into an agreement with Pilbara Minerals (ASX:PLS) allowing it to acquire Altura’s lithium operation in WA for $US175m ($247.8m) (reports Stockhead).

Lithium producers have been under pressure as prices for the battery material have halved to $US9 per kilogram for delivery to China, Korea and Japan from $US20/kg in January 2019, according to London Metal Exchange data.

Altura Mining’s receivers KordaMentha, appointed this week, said in a notice to the ASX Thursday they were not party to the deal between Altura’s lenders in the form of loan noteholders and Pilbara Minerals.

“The implementation agreement provides Pilbara Minerals with a mechanism to potentially acquire the Altura lithium project through the purchase of shares in ALO for approximately $US175m, subject to completion of the receivership process,” said KordaMentha.

Altura Lithium Operations (ALO) is a 100 per cent-owned subsidiary of Altura Mining that owns and operates its Altura lithium project located to the west of Pilbara Minerals’ Pilgangoora lithium-tantalum mine.

Pilbara Minerals has offered an up-front payment of $US155m for the Altura lithium project funded through a future equity raising for $240m which is supported by Australian Super and Resource Capital Fund.

“The potential acquisition represents a logical consolidation of two neighbouring operations to unite the greater Pilgangoora orebody, unlocking tangible synergies in both the short and long term,” said Pilbara Minerals managing director, Ken Brinsden.

“If successful, the acquisition will cement Pilbara Minerals’ position as the largest pure-play ASX-listed lithium company by enterprise value and will provide strong leverage to the expected recovery in lithium prices, driven by the increasing demand for electric vehicles and energy storage applications evident across the world,” he added.

Pilbara Minerals shipped 116,000 dry metric tonnes of spodumene concentrate in the 2020 financial year and had $86.3m of cash on its balance sheet at June 2020.

The Altura project had reached commercial levels of production in the September quarter of around 43,000 to 45,000 wet metric tonnes of spodumene concentrate.

Four shipments totaling 48,000 dmt of Altura spodumene had been sold to long-term offtake partners, said the company in an update last month.

The asset was listed in a government prospectus last week for investors seeking to put funds into Australian minerals projects.

The Altura lithium project is being placed into care and maintenance by its receivers to preserve cashflow.

Read more at https://stockhead.com.au/resources/pilbara-minerals-247m-bid-for-altura-...

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