Lithium mergers and acquisitions

No doubt a lot of you have been seeing the influx of M&A activity over the lithium sector of late. Although we are tiny in comparison it got me thinking about a number of things. With the majority of the world's major lithium deposits having been discovered, the appetite seems to have shifted to two extremes.

1. Big M&A deals between the largest players
2. Big players investing heavily in undervalued and underappreciated lithium resources/companies in order to have that first mover advantage.

In reference to point number 1, the latest one has been the merger of equals between Allkem and Livent. What we seem to be seeing is a race between the largest 5 or so lithium producers to try and knock Albermarle off that top spot. Take this screenshot from the merger presentation from Allkem and Livent.


To break things down a little.

- Albermarle ($22.82 bn USD MC): recently made a $2.50 bid for LTR which was laughed out of the room. At the time of posting LTR is trading at $2.95 and a MC of $6.51bn. They have the Wodgina mine in WA in a JV with Mineral Resources.

- SQM (18.93 bn USD MC): start of the year made a $20m investment in AZS off the back of a few great lithium intersections, while they were drilling for Nickel. AZS is now full steam ahead with 2 drill rigs, 4 more to come and 40,000m of drilling planned due to this. They keep touting a 100MT+ exploration target.

- Ganfeng ($18 bn USD MC): currently has off-take with CXO in the NT as well as a JV with Mineral Resources at Mt Marion in WA. They also have a presence in Mali through the Goulamina project.

- Mineral Resources ($14.33 bn MC): an interesting one. Price has eased since the last quarterly due to decreased guidance and increased costs at Mt Marion. They have also have a 9.7% stake in GLI and recently bought up just under 20% of ESS.

- Tianqi ($16.15 bn MC): have a lithium hydroxide plant just south of Perth and have a JV with IGO and together a 51% interest in the Greenbushes mine (still the premium one in the world).

- Pilbara Minerals ($14.33 bn MC): I left this one last as it seems to be sticking out like a sore thumb. They have the Pilgangoora project which we've discussed multiple times of these forums (see below and its proximity to Yarrie). Realistically, with the upswing in M&A activity, PLS risks falling behind their main competitors. In my opinion, they still have the best upside of all the major players through their lower costs and potential to continue increasing their resource, but I won't go into that. This increase though can't outstrip others going and adding massive resources to their book.




All attention seems to be on Uis, but as the number one fan of Yarrie will tell you (@asxtrader007), we are potentially sitting on a beast. I don't see any of those big players getting involved with Namibia, unless we can come up with a monster resource. The synergies and logistics just are not there at the moment. In spite of that, Huayou is already in the mix. Plus, we have the German government pledging to help Namibia to build a lithium processing plant. So some time has to pass there before the so called "Namibian discount" label is shaken off.

If, and a big IF, we can get some great results at Yarrie, I would not count out PLS making a small initial investment and down the line a T/O attempt. They paid their first dividend on March 24th, cash surpluses will be increasing as time goes on, and they will be hungry not to fall behind those main competitors. I've counted out GL1 because they are too focused on expanding Manna, potentially selling off Marble Bar, which does not seem as economical as once thought and Ron Mitchell is busy staving off the hyeenas who will want to take over the company before it becomes a billion dollar plus company (MIN I'm looking at you). I do think in time though that Manna has the potential to be a 100MT plus resource and a very profitable mine in spite of the high strip ratio.

Anyway, just some rambling and thoughts I've been sitting on for a while that I had a spare moment to flesh out. Happy to hear all your thoughts as well.

As always, not investment advice, do your own research. Good luck to all.