Bill Beament’s Develop Global moves on Essential with MinRes support
Bill Beament’s Develop Global has lobbed a friendly $152.6m all-scrip bid for lithium hopeful Essential Metals, winning the support of Chris Ellison’s Mineral Resources for the bid.
Bill Beament’s Develop Global has lobbed a friendly $152.6m all-scrip bid for lithium hopeful Essential Metals, winning the support of Chris Ellison’s Mineral Resources for the bid in a deal that will move the former gold boss into lithium for the first time.
Develop and Essential announced the friendly deal on Monday, with MinRes – which holds 13 per cent of Mr Beament’s company and 19.55 per cent of the lithium explorer – agreeing to sell its holding into the deal absent a better offer.
Essential shares shot up 18.1 per cent on the news, to close at 49c each, giving the miner a market capitalisation of just under $130m.
MinRes holds its stake courtesy of a last-minute intervention into Essential’s last friendly deal, the 50c a share offer made by IGO and China’s Tianqi Lithium.
MinRes snapped up its stake in Essential at above the offer price in the weeks ahead of the April 20 meeting to approve the deal with IGO and Tianqi, sparking speculation of a spoiler bid for the company, then voted to block the takeover without making its own play.
But Develop’s bid looks to be on a more secure footing, with Mr Beament stitchin up MinRes’ support ahead of the launch of its own offer.
Develop is offering one of its own shares for 6.18 Essential shares on issue, valuing the company’s stock at 56c, based on Develop’s $3.46 closing price on Friday.
MinRes has agreed to sell into the deal, absent a superior offer.
Develop will also launch a $50m capital raising at $3.20, a 26c discount to its last price, flagging the use of $8m to advance development of Essential’s Pioneer Dome lithium project and another $32m to push forward with work at its Woodlawn zinc and copper project in NSW.
Essential’s lithium project is relatively small, containing an 11.2 million tonne resource grading 1.16 per cent lithium. But it sits next to a railway running between Kalgoorlie and Esperance, as well as near a major gas pipeline, and is seen as an easy extension for projects elsewhere in the region.
It also sits within the same district as MinRes’ Mt Marion mine, and Essential’s implement deal with Develop includes a commitment to suspend any talks around the potential sale or toll-treatment of the deposit’s ore, sparking speculation Develop’s plans for the asset could well include a future deal with MinRes to feed Pioneer Dome ore through the Mt Marion processing plant.
MinRes has also flagged a potential move to underground mining at Mt Marion, which is not traditionally an area of expertise for the iron ore and lithium miner. But Mr Beament’s Develop also includes an underground mining arm, suggesting a broader alliance between the two companies could eventually become part of the mix.
The move on Essential marks Develop’s first foray into lithium, with the company also looking to build base metals mines at Woodlawn and at its Sulphur Springs project in WA.
Mr Beament said the all-scrip offer was a 35 per cent premium on Essential’s last closing price of 41.5c.
Essential had already been at the centre of other takeover rumours before the IGO-Tianqi tilt, with Global Lithium said to have kicked the tyres on the company’s deposit, along with ASX-listed Red Dirt Metals.