Essential shareholders back takeover offer

PERTH (miningweekly.com) – The shareholders of ASX-listed Essential Metals have backed a takeover offer from fellow listed Develop Global.

The two companies in July this year entered into a binding scheme of implementation deed under which Develop would acquire Essential, offering shareholders one new Develop share for every 6.18 Essential shares held.

The offer values Essential at around A$152.6-million, and places a value of 56c a share on Essential’s share price. This implied a premium of 34.9% to Essential’s last closing price and a 30.8% premium to the company’s 20-day volume weighted average share price.

Essential said on Wednesday that 93% of the votes cast at the company’s shareholder meeting on Wednesday, were in favour of the scheme, with 78% of Essential shareholders present and voting.

The transaction remained subject to a number of conditions, including Federal Court approval. A second court hearing is currently scheduled for October 24.

On the completion of the Develop deal, Essential shareholders would hold an 18.4% in the combined group, which is estimated to have a pro-forma market capitalisation of A$771.3-million based on Develop’s capital raising price of A$3.20 a share and cash of approximately A$81.7-million.

Essential’s flagship asset is the Pioneer Dome lithium project in Western Australia, a hard-rock lithium development asset with a mineral resource of 11.2-million tonnes at 1.16% lithium oxide. A feasibility study for the project is currently under way.