MinRes raid on Essential Metals shares suggest a spoiler bid for IGO and Tianqi’s lithium takeover
IGO and Tianqi’s takeover bid for the WA lithium play could face a counter proposal, with Chris Ellison’s Mineral Resources tipped as a big buyer.
Chris Ellison’s Mineral Resources has thrown a spanner into the works of IGO and Tianqi’s takeover bid for WA lithium play Essential Metals, snapping up a big stake in the junior amid speculation over a spoiler bid for the lithium explorer.
Essential shares closed at 58c on Friday, well above the 50c a share the offer price from IGO and Tianqi bid, after 62 million Essential shares – almost a quarter of the company’s register – changed hands over the course of the week.
MinRes late on Friday lodged a substantial shareholder notice showing the company has built up a 19.55 per cent stake in Essential ahead of an April 20 shareholder vote on its acquisition by Tianqi Lithium Energy Australia (TLEA), the joint venture between IGO and Chinese lithium major Tianqi.
Brokers from Bell Potter, favoured by MinRes in previous on-market raids, have been snapping up Essential shares in bulk over the last week, picking up as many as 52.3 million shares in the junior lithium play by Friday.
Even if MinRes halts its buying spree there, that stake is likely big enough to foil the takeover at the shareholder meeting called to approve the friendly tie-up.
Until Friday Essential’s only other major shareholder was Odey Asset Management, which held 13.8 million shares at the end of March, 5.2 per cent of the company’s stock, but said on Friday it had slipped below the 5 per cent mark after the sale of 300,554 shares.
Odey had previously made noises about blocking the deal, but has since been a seller on the market.
Essential needs to win the support of 75 per cent of the shares voted on the day for the deal to go ahead, plus the support of the majority of shareholders that voted, with the MinRes stake now likely to block the deal unless the overwhelming majority of small shareholders turn out to vote in favour of the deal.
MinRes is not believed to have yet approached Essential with an alternative offer, or an indication of its intent, with the late buying potentially forcing Essential to press ahead with the meeting despite the shadow cast by the major stake built up by the WA mining and services major.
IGO and Tianqi launched their $136m friendly bid for Essential in January, hoping to snap up the company’s Pioneer Dome lithium project, 130km south of Kalgoorlie.
The pair jointly own a lithium hydroxide refinery in Perth’s southern suburb of Kwinana, and half of the Greenbushes lithium mine in the south west of WA, with the play for Essential aimed at expanding their joint WA lithium assets.
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 has long been speculated as a potential target for the lithium and iron ore major. Global Lithium is also said to have kicked the tyres on the company’s deposit, along with ASX-listed Red Dirt Metals.
The play for Essential Metals stock also comes as a messy battle for control of mothballed lithium mine Bald Hill comes to a head in the courts.
MinRes is also believed to have used Bell Potter for a raid on Canadian lithium explorer Patriot Battery Metals in January that accelerated rumours the Chris Ellison-led miner was looking to put together a global platform from which to spin out its lithium assets.
Essential shares closed up 3c to 58c on Friday.