IGO and Tianqi’s takeover bid for WA lithium play Essential Metals could be about to face a counter proposal, with Chris Ellison’s Mineral Resources tipped as a big buyer over the last week.
Essential shares surged through the 50c a share offer price from the IGO and Tianqi bid on Friday, trading at as much as 57c a share in the early afternoon.
Market sources say brokerage Bell Potter – favoured by MinRes in previous on-market raids – has been snapping up Essential shares in bulk over the last week, picking up as many as 40 million shares in the junior lithium play by Friday afternoon.
That would put the buyer at just under 15 per cent of Essential’s register – likely enough to spoil the April 20 shareholder meeting called to approve the friendly tie-up.
IGO and Tianqilaunched their $136m friendly bid for Essential in January , hoping to snap up the company’s Pioneer Dome lithium project, 130km south of Kalgoorlie.
The pair jointly own a lithium hydroxide refinery in Perth’s southern suburb of Kwinana, and half of the Greenbushes lithium mine in the south west of WA, with the play for Essential aimed at expanding their joint WA lithium assets.
Essential’s lithium project is relatively small, containing an 11.2 million tonne resource grading 1.16 per cent lithium. But it sits next to a railway running between Kalgoorlie and Esperance, as well as a major gas pipeline.
It also sits within the same district as MinRes’ Mt Marion mine, and has long been speculated as a potential target for the lithium and iron ore major. Global Lithium is also said to have kicked the tyres on the company’s deposit, along with ASX-listed Red Dirt Metals.
The play for Essential Metals stock also comes asa messy battle for control of mothballed lithium mine Bald Hill comes to a head in the courts.
MinRes is also believed to have used Bell Potter for a raid on Canadian lithium explorer Patriot Battery Metals in January that accelerated rumours the Chris Ellison-led miner was looking to put together a global platform from which to spin out its lithium assets.
A stake of above 15 per cent would almost certainly translated into a blocking stake at the company’s April 20 shareholder meeting, given its only other major shareholder is Odey Asset Management with about 5.2 per cent of the company’s stock.
Odey had previously made noises about blocking the deal, but has since been a seller on the market.
The company needs to win the support of 75 per cent of the shares voted on the day for the deal to go ahead, plus the support of the majority of shareholders that voted.
Essential shares were up 2c, or 3.6 per cent to 57c at 1400 AEST.
