https://www.copyright link/street-talk/three-contenders-for-lithium-target-essential-metals-20220426-p5ag3gand the article
Lithium and gold explorer Essential Metals’dalliance with a well-heeled suitor has shot it on to dealmakers’ radars, andsent bankers scrambling to try to find a suitor.
Essential Metals revealed on Tuesday morning thatit had received an indicative and non-binding takeover offer, subject to duediligence and a 90 per cent acceptance threshold.
While Essential Metals sent its advisers - Perth’sSternship Advisers and HopgoodGanim - into takeover talks with the unnamedsuitor, the company’s share price ran and the talks collapsed.
As the dust settles on the juicy affair, tonguesare wagging about who lobbed the indicative bid and under what conditions theymay be tempted to return.
The mystery suitor was clearly a party that thoughtthere were synergies in acquiring Essential Metals, and particularly itsPioneer Dome lithium project in south-eastern Western Australia, which is whatsuitors are likely to find most appealing.
From Street Talk’s discussions with industryplayers, there are three names that fit the bill: China’s Gangfen
Lithium andASX-listed Liontown Resources and Global Lithium Resources.
Gangfeng owns part of the much bigger Mt Marionproject, to Pioneer Dome’s north, which is in reasonably close proximity andcould potentially process its ore.
Gangfeng has a lot of experience in Australia, ownstoehold stakes in $2.3 billion listed Core Lithium and the $8 billion PilbaraMinerals, as well as an offtake agreement with the latter.
Importantly, Gangfeng’s Bacanora project in Mexicois also in jeopardy, after Mexico nationalised lithium, so it could make senseto see the miner looking for other hard rock lithium projects to shore up itsposition.
As for Liontown, another of the ASX’s lithiumtearaways, its second lithium project Buldania is close to Essential Metals’Pioneer Dome.
Between Buldania and Essential Metals, there wouldbe about 30 million tonnes, which would be enough for a large-scale development,and a serious second project for Liontown which now has its Kathleen Valleyfully funded.
The third potential suitor, Global Lithium, is thesmallest of the trio. It has been consolidating lithium resources in WA, andEssential Metals could provide a third beachhead alongside its Marble Bar andManna projects.
Global Lithium has Mineral Resources as a largeshareholder so, like Gangfeng, could potentially use Mt Marion’s infrastructureto process Pioneer Dome (and Manna’s) ore.
Analysts reckon the wildcard could be AustroidCorporation, which owns the secured debt on the nearby Bald Hill mine that isstill in administration and on care and maintenance.
While Ball Hill is close to Essential Metals,Austroid still has not received FIRB approval to convert its Bald Hill debt toownership of the asset given its Chinese connections, which could make it hardfor them to bid on Essential Metals.
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