Explorers go into trading halts ahead of potential lithium deal with Gina Rinehart

Sean SmithThe West Australian

Wed, 14 June 2023 7:28PM

Gina Rinehart’s Hancock Prospecting is readying for a drilling blitz over WA’s Yilgarn minerals belt as part of a new lithium venture with India.

The exploration partnership with Indian group NMDC is set to be finalised on Thursday in the miner’s home city of Hyderabad just two weeks after Mrs Rinehart met privately with Indian Prime Minister Narendra Modi during his Australian visit.

The agreement has been negotiated against a background of high-level talks between India and Australia on expanding the former’s access to critical minerals.

It is believed that under the deal Hancock could spend up to $30 million to earn a 51 per cent stake in a new exploration joint venture over ground at Mt Bevan in the Central Yilgarn held by the NMDC-backed Legacy Iron Ore and Hawthorn Resources.

The anticipated lithium partnership comes on the heels of a deal on Wednesday in which Japanese group Idemitsu took a grip on Delta Lithium and “the most exciting pre-development lithium projects in Australia” by spending $46.4m to lift its stake in the explorer to 15 per cent.

Delta’s flagship Mt Ida lithium project borders Mt Bevan, 250km north of Kalgoorlie, where until recently the primary focus had been on a large magnetite deposit.

Hancock had already taken hold of the junior explorers’ iron ore project but in August last year also agreed a non-binding agreement with Legacy and Hawthorn to look over Mt Bevan’s potential for lithium, copper and nickel.

Finalisation of the lithium pact would further fuel the red-hot interest in WA’s lithium sector amid an accelerating rush by existing lithium players and other investors seeking to lock down potential supplies of the battery metal to meet rising global demand for electric vehicles.

Perth dealmaker and Argonaut director Liam Twigger said he had yet to see a let-up in interest from deep-pocketed offshore companies looking to snap up WA lithium companies, mines or deposits.

“The appetite is insane,” Mr Twigger said, adding that the interest reflected a belief that lithium supplies will be stretched to meet demand.

“They’re positioning themselves for the next five or 10 years; they’re not thinking that new mines are going to come on and flood the market, they’re seeing shortages for a long period of time.”

It was a similar message from Perth’s biggest corporate advisory firm Azure Capital, which said it was “active across a number of potential transactions”.

“In contrast to the general slow down in mergers and acquisitions activity driven by factors such as increased funding costs and decline in corporate confidence, we are not seeing any slowdown in activity in the critical minerals sector,” managing partner Richie Baston said.

Wednesday’s premium-priced share placement in Delta gives Idemitsu the power to block a takeover of the company but comes with an unique strategic pact that commits the group to backing the recommendation of the Delta board on any offer.

The three-year pact is also conditional on executive chairman David Flanagan remaining at the helm of Delta, which is fast-tracking lithium projects in the Central Yilgarn and the Gascoyne.

Idemitsu’s chief executive in Australia, Steve Kovac, said the expanded Delta investment — the company bought into the explorer in November — was “another exciting move as we double down on our strategic investments in critical minerals”.

“We very much look forward to working with the team at Delta as they develop what we think are the most exciting pre-development lithium projects in Australia,” he said.

Mr Flanagan told thewest.com.au that the Idemitsu investment was a huge boost to Delta’s development plans and also offered access to the Japanese company’s deep capabilities in battery technologies, chemical engineering, commodity trading and shipping.

“I’m quite attracted to their expertise in chemical engineering. Everyone poo-poos the idea of Australia having a battery plant, but maybe we need to start with small steps and do some form of intermediate downstream processing,” he said.

“And if you have got the right partner, you don’t know where it’s going to end up.”

Delta is issuing 65.6 million new shares to Idemitsu at 70.75¢ a share, an 8 per cent premium to Tuesday’s closing price. The stock closed 1.5¢ better at 67¢.

The proceeds from the raising will be used to advance work on the Mt Ida project in the Central Yilgarn and the Yinnetharra lithium deposit in the Gascoyne. Delta’s major focus is on Mt Ida, where it is working towards mining approvals by the end of the year.

The company says it could enter production for as little as $50m, initially producing a direct shipping ore product that would probably be exported from Geraldton.

https://www.*kalminer*.com.au/business/lithium/explorers-go-into-trading-halts-ahead-of-potential-lithium-deal-with-gina-rinehart-c-10975088

(again my apologies if posted before.)