Chris Ellison’s Bald Hill bargain
Nov 28, 2023 – 5.39pm
Mineral Resources’ lithium processing plant at Wodgina in Western Australia. none
However, according toreports inThe Australian Financial Review, shareholders had hoped for a more substantial figure after being told that 10 potential buyers had shown interest in Bald Hill amid soaring valuations for lithium exploration companies in WA. Sources who spoke to Street Talk also said they’d seen an offer for the business valuing it at the $1 billion-plus mark and questioned whether the process was run competitively.
McGrathNicol declined to comment when contacted by Street Talk. We imagine they’d point to the independent expert’s report which said the asset could be worth somewhere betweongoing tax office investigation into an offtake agreementen zero and $94.2 million, and that MinRes paid at the higher end, making it a positive outcome for stakeholders. The valuation has been complicated by aninvolving Bald Hill and Yihe.
The final price also wasn’t foreseen by analysts. In a September note, Citi Australia analyst Kate McCutcheon said Mineral Resources “may eventually get a bargain south of $1 billion”, for the Bald Hill mine. Alongside the steep decline in lithium prices and MinRes saying the asset is not materials, McCutcheon reduced the expected sale price to $500 million on November 17 – still almost double the final price.
The mooted deal comes amid a flurry of M&A activity in the lithium sector, both locally and offshore as companies battle for control of key assets as the world transitions to cleaner energy. MinRes has indicated it could double production at Bald Hill 300,000 tonnes a year within 12 months
Citi says the acquisition is of strategic benefit to MinRes and estimates the acquisition will make it the second-largest lithium producer in Australia behind Pilbara Minerals.
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So are BH mine being valued reasonably or are we being sold to MinRES by the liquidators ( MGN) in a hurry … thereby was offered a significant lower price?Is the IER being peer reviewed. Imo
