Azure confirms $901m SQM bid, Barrenjoey on board

The company said that the approaches were non-binding and highly conditional.

Further evidence is emerging of the major land grab underway for lithium after Azure Minerals confirmed a $901m buyout proposal recently landed from SQM and speculation suggests Chris Ellison’s Mineral Resources has bought into Delta Lithium.

In what is another sign of the surging demand for the key resource used to make batteries in electric vehicles, Azure Minerals confirmed DataRoom’s report on Monday that its major shareholder, SQM, was preparing to lob an acquisition proposal for the business.

The buyout activity follows a $5.5bn takeout approach for Liontown Resources from the world’s largest lithium producer Albemarle earlier this year that was rebuffed by the company.

Demand for lithium is growing by 30 per cent with the lithium price still six times the 2019 low despite it coming off the boil of late.

Australia’s spodumene exports are up 50 per cent year to date, primarily heading to China.

DataRoom reported on Monday that SQM – short for Sociedad Quimica y Minera de Chile – was preparing an offer of around $2.30 a share for Azure.

In a statement to the Australian Securities Exchange released on Tuesday, Azure Minerals confirmed that it had previously received expressions of interest from SQM regarding a possible change of control transaction involving Azure, the most recent of which was received by Azure on July 12 and had an indicative offer price of $2.31 per share.

The company said that the approaches were non-binding and highly conditional, requiring Foreign Investment Review Board approval and due diligence.

The offer was rejected due to the potential of its Andover Lithium Project in the West Pilbara region of Western Australia and the company determined that the approaches did not warrant further engagement by the company, saying no further discussions had occurred.

Azure said that following the recent release of numerous highly promising lithium results and the company’s exploration target, Azure’s share price had traded above the indicative offer price and hit an intraday high of $2.96 on August 8.

The news sent Azure Minerals’ share price more than 7 per cent higher on Tuesday, closing at up 16c to $2.50, equating to a $980m market value.

As previously announced, Azure Minerals is targeting a maiden Mineral Resource Estimate for Andover in the first quarter of 2024.

Azure is working with investment bank Barrenjoey and law firm Corrs Chambers Westgarth.

DataRoom reported on Monday that the company had been an obvious takeover option for lithium major SQM for some time, with the company sitting at just under 20 per cent of Azure’s register.

Azure’s exploration target released last week of an estimated potential mineralisation of 100 to 240 million tonnes at 1 to 1.5 per cent lithium pushed the group’s share price close to $3.

The challenge for any buyer is that WA prospector Mark Creasy owns 40 per cent of the underlying lithium asset.

Azure owns 60 per cent of its deposit at its Andover Project.

Meanwhile, speculation has surfaced that the Chris Ellison-led Mineral Resources is the mystery buyer of a stake of more than 11 per cent in Delta Lithium on Monday night.

A parcel of 60 million shares crossed at 92.5c each after the stock closed at 75c, in a trade worth $55.5m.

It is understood MinRes already has a small stake in Patriot Battery Metals and it owns about 10 per cent of the $429m listed lithium miner Global Lithium.

Shares in Delta Lithium on Tuesday closed at 81c.

Mineral Resources has a market value of almost $13bn and generates income from its two iron ore hubs – Utah Point in Port Hedland and Yilgarn in Esperance, Western Australia.

As well as iron ore mining and bulk ore transportation in the Pilbara, Mineral Resources also operates two hard rock lithium mines in Western Australia, Mount Marion in the Goldfields and Wodgina in the Pilbara.