Ellison backs legal fight linked to Bald hill lithium mine

Brad ThompsonDec 19, 2023 – 6.15pm

Mining billionaire Chris Ellison. Trevor Collensnone

Chris Ellison’s Mineral Resources is backing a push to oust McGrathNicol as liquidators of Singapore-listed Alita Resources, just weeks after wrapping up a deal to buy the Bald Hill lithium mine in Western Australia off Alita for $260 million.

If the move to terminate the liquidation of Alita is successful and install new governance, Mr Ellison wants to become a director of the company.

MinRes finalised the acquisition of Bald Hill in November through a deal with Alita and McGrathNicol in its role as administrator. Some Alita shareholders complained the sale price was too low.

The legal action is the latest twist in the saga of Alita and Bald Hill that already spans Treasurer Jim Chalmers’ intervention blocking an earlier sale attempt to China-linked interests, and an Australian Tax Office investigation into an offtake agreement.

MinRes owns 9.9 per cent of Alita through a subsidiary and is backing legal action instigated by two Alita directors – Fergus Jockel and Paul O’Farrell – in the West Australian Supreme Court.

Mr Jockel and Mr O’Farrell, with the support of MinRes, claim a new board could carry out the work being done by McGrathNicol.

The court application seeks orders including the right to issue a notice of meeting to shareholders and allow them to vote on three board nominees, including Mr Ellison.

MinRes said shareholders should be allowed to have a say on the future affairs of Alita.

“Alita Resources has circa $100 million in cash. There is no longer a need for liquidators who are charging significant fees for their services,” a MinRes spokesman said.

“MinRes supports control reverting to a newly constituted board of directors who have been approved by shareholders and who will be accountable to the shareholders.”

McGrathNicol said last week that Mr Jockel and Mr O’Farrell hadn’t consulted it before filing the court application.

The matter was adjourned until January 19 after a brief mention on Tuesday where MinRes was granted the right to be heard as an interested party.

Some Alita shareholders anticipated a much higher premium for Bald Hill after being told in September that more than 10 potential buyers had shown interest in the mine. Potential buyers began circling after Dr Chalmers blocked a sale to Austroid Corporation in July based on apparent links between US-based Austroid and Chinese lithium battery maker Sichuan.

And the tax office continues to investigate an offtake agreement involving Bald Hill and Hong-Kong registered Yihe Cleantech Material, according to an update to Alita shareholders issued by McGrathNicol in November.

McGrathNicol said at the time that MinRes agreed to a sale price of $100 million in light of a valuation carried out by Deloitte. MinRes paid an additional $73.9 million to cover all of Alita’s secured debt and about $86.1 million owed to Austroid and Yihe.

Mr Ellison has claimed MinRes could double production at Bald Hill to 300,000 tonnes a year within 12 months, and also sees potential to extend the mine’s life.

Alita went into administration in 2019 when the price of lithium plunged. The Bald Hill mine sits in a lithium hotspot around Kalgoorlie and Norseman in WA.