ASX-listed lithium explorer Azure Minerals has agreed to sell itself to Chilean giant Sociedad Química y Minera for $1.63 billion, as deal fever sweeps through the West Australian lithium sector.
Azure’s board accepted an offer of $3.50 a share, a staggering 54 per cent higher than SQM’s first approach of $2.31 lobbed last month.
Before Azure became a takeover target, shares in the lithium hopeful were worth just 12¢ in January, valuing the company at $68 million. Azure is seeking to build its flagship Andover project in the West Pilbara.
SQM is the largest shareholder in Azure with a 19.9 per cent stake, and is eager to expand its Australian operations to diversify beyond Chile. SQM already partners with Wesfarmers on WA’s Mt Holland lithium mine and Kwinana lithium hydroxide processing plant.
Azure told the market on Thursday that major shareholder, Delphi Group, intends to support the bid.
Delphi’s support shapes as a coup for SQM given the German group had frustrated Genesis Minerals’ attempts to acquire 100 per cent of Dacian Gold over the past year.
Explorer Mark Creasy’s company, Yandal, owns just over 13 per cent of Azure shares and 40 per cent of the Andover project.
“Whilst we firmly believe that Andover has the potential to be a major lithium project, there is significant time, cost and risk associated with developing a project of this scale, particularly in the context of an uncertain broader economic outlook,” said Tony Rovira, Azure’s managing director.
“The transaction provides Azure shareholders with a compelling opportunity to de-risk their investment and realise certain value at an attractive premium to historical trading levels.”
This comes just a week after US lithium giant Albemarle abandoned a $6.6 billion takeover bid for WA developer Liontown Resources.
It extends a staggering rise to prominence for Azure. Early drilling results from Azure’s Andover prospect near the Pilbara town of Roebourne sent Azure shares soaring in June, and by August it was worth almost $1.2 billion.
That valuation was achieved despite the fact Azure’s exploration work is at such an early stage that the company has not yet declared a mineral resource estimate for Andover.
A mineral resource estimate is the first significant formal disclosure milestone that an explorer must pass to enable investors to assess the size and quality of a geological discovery.
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