Article by Adrian Rauso courtesy of the West Australian.
Mining billionaire Gina Rinehart is set to land her first big play in lithium, with Azure Minerals on the cusp of being snapped up for around $1.7 billion.
The intricate deal has gone ahead after billionaire prospector Mark Creasy gave his blessing for Chilean giant SQM to shake hands with Mrs Rinehart.
SQM and Mrs Rinehart’s Hancock Prospecting have joined together to lob an all-cash $3.70- a-share scheme of arrangement proposal, which if not successful will trigger an off-market takeover priced at $3.65 each.
The latter option is looking more likely, as under a scheme of arrangement Chris Ellison’s Mineral Resources will have to sell its 13.6 per cent stake for a gross profit of around $2.5 million on a $228m investment, which does not include transaction or brokerage fees.
The West Australian understands the two-pronged deal structure was formulated so if MinRes blocks the scheme the proposal would shift to an off-market takeover, which would not force MinRes to sell off its holding.
It is understood MinRes does not have a position on the deal yet and is keeping its options open.
The joint bid from Azure’s two largest shareholders — who control 37.8 per cent of the register — will supersede SQM’s October solo offer for the battery metal hopeful at $3.52 a share, which had valued Azure at $1.63b.
The latest offer is a 63.9 per cent premium to Azure’s 10-day volume-weighted average price of $2.26 prior to SQM’s October bid. The deal remains contingent on SQM receiving Foreign Investment Review Board approval.
As reported by The West on Monday, Mr Creasy emerged as the kingmaker during late-stage negotiations for the complex deal to be struck.
The tie-up between SQM and Hancock has the blessing of Mr Creasy’s Yandal Group, which holds a 12.8 per cent stake in Azure.
Filings to the Australian Securities Exchange on October 13 revealed that Yandal acquired $16m of Azure stock to take its shareholding from 12.1 per cent to 13.2 per cent.
This occurred less than two weeks prior to the SQM takeover offer becoming public.
Azure has a 60 per cent stake in its flagship Andover lithium and nickel-copper-cobalt project in the Pilbara, with the remaining 40 per cent owned by Mr Creasy’s other key investment vehicle, the Creasy Group.
Another key Azure shareholder — Delphi Group — holds just over 10 per cent of the register and has also agreed to cash out.
Hancock’s chief executive Garry Korte said the deal provides Azure shareholders with a compelling offer to receive substantial cash value for their shares despite weakening market conditions.
“This powerful partnership (with SQM) brings together the complementary skills of our respective companies across West Australian mining exploration, development, operation and processing for the long term,” he said.
“With Hancock reviewing a number of early stage lithium prospects, this offer continues Mrs Rinehart’s substantial support for the West Australian mining industry.”
SQM’s chief executive Ricardo Ramos said the company was pleased to get unanimous support from the Azure board and major shareholders.
“As Azure’s 19.4 per cent shareholder, SQM is pleased with the progress Azure’s management team have made in understanding the potential of Andover through exploration drilling,” Mr Ramos said.
“Moving forward, SQM will look to deploy its lithium expertise alongside Hancock’s significant local mining knowledge and track record of project development to manage the elevated risk profile associated with early-stage exploration projects.”
Azure’s managing director Tony Rovira said the deal was a “fantastic” outcome for shareholders, including a “significant uplift in value” from the original bid “despite elevated market volatility and the recent deterioration in lithium prices”.
“The transaction also represents a great outcome for wider stakeholders in Andover, who will benefit from the significant financial strength and expertise of one of Australia’s largest and most well-respected mining and exploration companies, Hancock, combining with SQM to oversee the successful development of Andover,” he said..After SQM lobbed its offer in October Mrs Rinehart’s Hancock swiftly amassed an 18.3 per cent “strategic stake” in Azure.
Mr Ellison’s MinRes followed suit last month by acquiring its 13.6 per cent stake.
Shares in Azure peaked as high as $4.37 last month fuelled by the rapid ascent of the two mining billionaires up Azure’s register, but were then pared back to $3.63 prior to Tuesday’s bid.
A vote for the deal is slated for mid-March.
