Azure Minerals rebuffs equity raising talk

Growing demand for lithium batteries is creating soaring demand for lithium from producers as more electric vehicles hit the roads. Picture: News Regional Media.

Lithium stock Azure Minerals has shut down talk in the market of an imminent equity raising by the company of between $70m to $120m.

There has been speculation that Azure was about to tap the market any day, but senior company sources say that its share price would need to be far higher before it considered such a move and that there was no equity raising about to unfold.

Shares in Azure closed 7.6 per cent higher at $2.69 in a sharply lower market on Wednesday.

Sources believe that the group, which rebuffed a $901m buyout approach from SQM last month, could be in search of additional funds to pay for future development, given it only had $17.4m of cash on its balance sheet at the end of June.

Should it move to source additional cash from investors, it would likely call on the services of adviser Barrenjoey and a retail broker.

Euroz Hartleys has acted for the company when it raised funds in 2020.

Some have interpreted the company’s revelation to the market on Tuesday about a $2.31 per share offer from Chile’s SQM as somewhat of a cleansing statement before it went cap in hand to investors.

SQM, or Sociedad Quimica y Minera de Chile as it is known, is also a major shareholder of Azure, holding 19.99 per cent of the stock.

The New York listed company released a statement to the market on Wednesday confirming that it held confidential negotiations with Azure management in relation to a change in control transaction, which included submitting the $2.31 per share offer on July 12.

SQM said that at the time it submitted the offer, it represented a 39 per cent premium to Azure’s last close of $1.67 per share.

SQM, which has aspirations to gain a leading world position in the lithium, potassium nitrate, iodine and thermos-solar salts markets, said in its statement it has appointed Macquarie Capital as financial adviser and Herbert Smith Freehills as legal adviser in relation to the potential transaction.

The takeover talk comes after Azure confirmed a report in DataRoom on Monday that SQM was planning to launch a bid for the company.

Azure owns 60 per cent of the Andover Lithium Project in the West Pilbara region of Western Australia, which has signalled promising lithium results, with the Creasy Group owning the remainder.

Azure was started in the mid 2000s exploring for gold, silver and copper in Mexico, but the assets there were sold, and it refocused back on Australia where it has partnered with well known mining prospector Mark Creasy, who vended his nickel project into the business in 2020.

The Adover deposit discovered lithium and nickel, but lithium is now the company’s focus.

SQM is separately in a joint venture with Wesfarmers in the Mt Holland lithium project, with the mine and associated refinery at Kwinana to produce 50,000 tonnes of lithium hydroxide.

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

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.