Chinese, Koreans circle Galaxy’s $460m lithium stake in Argentina

https://www.theaustralian.com.au/bu...a/news-story/f1d8e7aa5d9400875530e00b8583394b

Galaxy Resources has tapped investment bank JPMorgan to offload a stake in its Sal de Vida project in Argentina — one of the world’s largest and highest quality lithium deposits.

It is understood that Chinese parties — likely to be Tianqi and Ganfeng — and Korean steelmaking giant Posco are eager to buy the stake.

Galaxy’s Sal de Vida project is believed to be worth about $US500 million ($660m) and it is understood that the company wants to offload a non-controlling interest worth less than $US350m, which involves an offtake agreement and equity.

JPMorgan is understood to have won the role after a beauty parade of investment banks was held in recent months.
According to the company’s website, Sal de Vida has the potential to generate annual revenues worth $US215m and operating cash flow before interest and tax of $US118m per annum at full production rates.
The lithium miner indicated a year ago that it was contemplating a sale as it weighed up funding options for the project.

At that time managing director Anthony Tse said the plan could be to sell a stake of between 30 per cent and 40 per cent in the project, which would reduce Galaxy’s share of the projects $US376m capital cost and help fund its remaining portion of the capex bill.

Not too far from the company’s memory would be the challenges it faced during 2013 that came with carrying too much debt.

At the time, the company came close to collapse.

But Galaxy has roared ahead on the Australian Securities Exchange since, with its share price gaining 330 per cent during 2016, with lithium demand soaring on the back of the acceleration of the electric car market.
However, while the demand for electric car shows no signs of waning, lithium stocks have fallen this year in what is seen as a correction in an overheated market, which still has a long way to run. Concerns also remain about the potential for an oversupply.

Meanwhile, expectations are low that Eramet’s bid for Mineral Deposits will be rivalled by another suitor. Global manganese and nickel producer Eramet lobbed a $1.46 per share cash bid for the Australian listed Mineral Deposits, run by former Macquarie banker Rob Sennitt, late last week, valuing the company at about $291m.

The price offered for the mineral sands producer was a 26 per cent premium to the prior closing share price of $1.16.

The pair already jointly own the TiZir mineral sands joint venture business in Senegal and Norway.

Perhaps mineral sands producer Tronox could consider a rival offer, although it is said to be unlikely.