Ann: Response to Media Speculation, page-191

Lithium heavyweight SQM faces having to stump up well over $1 billion to secure a Perth-based exploration company worth just $70 million at the start of the year after having initial takeover offers rejected.

Azure Minerals said on Tuesday that it had spurned indicative and conditional takeover offers from New York-listed SQM.

The most recent SQM cash offer came on July 12 at an indicative price of $2.31 a share and valued Azure at more than $900 million.

The Azure share price jumped almost 12 per cent to $2.62 when it emerged from a trading halt on Tuesday morning.

Azure has a 60 per cent stake in the Andover lithium discovery in iron ore mining country south-east of Karratha. Legendary prospector Mark Creasy owns the remaining 40 per cent of Andover and has a 13.4 per cent stake in Azure.

SQM is the biggest shareholder in Azure after paying about $20 million for a 19.99 per cent stake in January when the stock was trading at about 22¢.

Azure said the recent takeover offers from SQM, Wesfarmers’ partner in the Mt Holland lithium project in Western Australian, had been non-binding and conditional, including in regard to Foreign Investment Review Board approval.

“Following careful consideration of the content of these approaches and in light of our rapidly evolving understanding of the potential of the Andover lithium project, Azure determined that the approaches did not warrant further engagement by the company and no further discussions have occurred,” Azure said.

Azure stock has traded above the $2.31 offer price in recent weeks and hit an interday high of $2.96 on August 8 on the back the release of an exploration target touting estimated potential mineralisation of 100 to 240 million tonnes at 1-1.5 per cent lithium.

Azure, under managing director Tony Rovira, purchased 60 per cent of Andover from the Creasy Group in 2020.

Mr Rovira told the Diggers & Dealers mining conference in Kalgoorlie last week that if the exploration target were achieved, it would put Andover in the top 10 lithium resources in the world and into the top five at the upper end.

“The opportunity and the potential of the project was recognised very early on, not only by ourselves, but also by SQM,” he said.

“Having SQM come on board was a very strong endorsement for the potential of Andover and that potential is now being realised with a very large drilling program. We’ve estimated we’ll probably drill about 100,000 metres in calendar year 2023.”

Mr Rovira said that in addition to the potential size of the lithium resource, Andover was ideally located for a mining and processing operation.

Gas and water pipelines and high voltage power lines run through the Andover footprint and a Rio Tinto rail line runs along the western edge of the tenements.

Chile-based SQM said in May that it intended to double down on what is already a multibillion-dollar investment in WA lithium alongside Wesfarmers.

SQM chief executive Ricardo Ramos indicated at the time that the increased investment in WA would come from $US3.4 billion earmarked for capital expenditure to boost lithium production.

Mr Ramos said building a 380,000 tonne concentrator at Mt Holland and 50,000 tonne lithium hydroxide plant at Kwinana in partnership with Wesfarmers was “just the first step” in WA.

SQM is the world’s second-biggest lithium producer, from brine operations in South America.

Its quest for Azure comes after Albemarle had a $5.5 billion takeover offer from Liontown Resources and its Kathleen Valley lithium project near Leinster in WA rejected in March.