Lithium Australia launches A$23.8m takeover bid for Lepidico

PERTH (miningweekly.com) – ASX-listed Lithium Australia has announced its intent to launch a A$23.8-million off-market scrip bid for fellow-listed lithium explorer Lepidico.

Lithium Australia on Monday said it would offer one of its fully paid ordinary shares for every 13.25 fully paid ordinary shares in Lepidico.

The takeover offer is a significant premium to Lepidico’s current trading price and is a 9% premium based on the ten-day volume weighted average price of both companies.

Lithium Australia last year launched litigation against a subsidiary of Lepidico in the Supreme Court of Western Australia, for the right to exploit a lithium extraction process called SiLeach.

Lepidico filed a counter claim, alleging that its now-suitor had developed the process without authorisation, exploiting Lepidico’s intellectual property in its L-Max technology.

“Lithium Australia and Lepidico have a similar business strategy and both have excellent exploration projects and development prospects,” said Lithium Australia MD Adrian Griffin.

“The litigation in relation to processing technology is distracting and expensive and, although Lithium Australia is confident of a positive outcome, the time and resources currently dedicated to the legal processes would be better employed in advancing our projects and technologies in concert and for the benefit of shareholders of both companies.”

Griffin said it was the synergies in aspiration and assets that made combining the two companies the perfect opportunity for all shareholders.

“The combined entity is likely to be significantly more attractive for investors and financiers, as well as being a global leader in lithium processing at a time of unprecedented lithium demand.”

Lithium Australia has now entered into agreements with Lepidico shareholders holding a combined 17.87% interest in the company, who have agreed to accept the takeover offer in the absence of a higher bid.

Meanwhile, Lepidico, which has told shareholders not to take any action regarding the proposed offer from Lithium Australia, has signed a letter of intent (LoI) with TSX-listed Avalon Advanced Materials for an integrated lepidolite mining and lithium carbonate production partnership in Canada.

Avalon owns the Separation Rapids lithium deposit in Ontario.

Under the LoI, Avalon will sell at least 15 000 t/y of lepidolite concentrate produced from its planned demonstration-scale pilot plant to Lepidico for processing at its planned Phase 1 commercial lithium carbonate production facility.

As part of its prefeasibility studies, Lepidico is contemplating locating its Phase 1 plant in Canada, near large consumers of its L-Max products. Subject to the successful completion of the prefeasibility study, Lepidico plans to undertake a definitive feasibility study, which is scheduled for completion by December.