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Tightening capital markets and strong commodity prices are combining to create the “ideal” conditions for consolidation. Pic via Getty Images Pic: Getty Images
Predator and Prey: Lithium in the Gascoyne
Mining
2 hours ago | Jessica Cummins


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Merger and acquisition (M&A) activity can be a huge value creator for shareholders, especially for those invested in the target firm. *’s Predator & Prey column examines mining’s biggest corporate power plays and some of the ASX explorers ripe for consolidation.

• WA’s Gascoyne region has captured investor attention thanks to DLI’s lithium discoveries
• As the most mature operator in the district, it is an obvious takeover target
• But who are some lithium microcaps in the region that could well be on the consolidator’s radars?

WA’s remote, under-explored Gascoyne region has captured the hearts (and wallets) of resources investors in recent times, thanks to a flurry of lithium discoveries.
When Delta Lithium (ASXLI) began exploring its Yinnetharra project near Gascoyne Junction late last year, the Mid-West region of WA was anything but a lithium hub.
But numerous big hits, like 56m at 1.12% lithium in a field full of “great big slabs of unmapped pegmatites sticking out of the ground” now has Yinnietharra “looking more like a province than a project”.
It sparked a pegging rush, featuring big names like FMG and a collection of savvy small cap explorers.
Meanwhile, Gina Rinehart’s Hancock Prospecting and Chris Ellison’s $13.39bn Mineral Resources (ASX:MIN) are jostling for control of Delta, which is concurrently working towards first production at the Mt Ida project and a maiden resource at Yinnietharra.
Earlier this week, the acquisitive Ellison took another swing at regional consolidation, joining the ranks on DLI’s board as non-executive chairman as MIN increased its stake to 17.44%.


Delta: an obvious takeover target

Latest research out of BDO suggests that more M&A activity could be on the way so long as cash balances remain high, commodity prices continue to come off, and equity valuations remain in discount territory.
Guy Le Page, director of Perth-based RM Corporate Finance says more corporate activity is likely in what is turning out to be a WA ‘lithium super province’.
“Consolidation is likely to happen where you have discoveries in and around bigger players,” he says.
“It is clear MinRes want to control as much lithium production out of WA as possible.
“I suppose Gina Rinehart and others are nipping at the heels, but MinRes have the dominant position and are the ultimate consolidator with all the downstream infrastructure.”
Delta has yet to define a resource for Yinnietharra but drilling to date suggest a significant discovery. As the most mature operator in the district, it is an obvious takeover target, Le Page says.
“They are moving ahead quite quickly, and I expect there could be some consolidation,” he says.
“Talking principally about Yinnetharra — attractive things are grade, strike length, width, mineable widths, near surface – from a mining and grade point of view, they tick a lot of boxes.
“They’ve got six pegmatite swarms, a lot of mineralisation down to 300 or 400m deep, mineralisation expanding over several kilometres.
“And metallurgy test work has been pretty good, getting recoveries on even some of the higher-grade concentrates of 60 to 70 per cent.”