AdvertisementMinRes in row over lithium processing hub
Brad ThompsonReporterMay 1, 2024 – 10.48amListen to this article3 minA nickel minnow has accused Mineral Resources of trying to back out of a deal central to the big lithium player’s plans to develop a new Western Australian processing hub for the battery ingredient.
Poseidon Nickel said MinRes, led by billionaire Chris Ellison, baulked at the agreed terms for the sale of a nickel concentrator and tenements at Lake Johnston in WA’s Goldfields.
Mineral Resources boss Chris Ellison. Trevor Collens
Poseidon, with a market capitalisation of $22 million, wants to take the $14.1 billion MinRes to court.
MinRes said in March that it intended to retro-fit the Lake Johnston nickel infrastructure and turn it into a major lithium processing hub.
Poseidon was notified by MinRes late on Tuesday afternoon that it no longer wanted to proceed with the deal on the terms announced on March 18, whereby MinRes agreed to pay $15 million plus a royalty stream to Poseidon in return for the Lake Johnston assets.
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“The terms which have been suggested by MinRes are materially different to the agreed transaction, and at the time of making this announcement, the board considers are not in the best interests of its shareholders.”
Poseidon chief executive Brendan Shalders said the company wanted to proceed with the deal as agreed in March and is weighing up its legal options.
“It is disappointing that MinRes have sought at this late stage to amend the transaction as agreed,” he said.
‘Exciting opportunity’
A MinRes spokesman said it was carrying out “legal due diligence” on the Lake Johnston transaction, and “we look forward to working with Poseidon on the finalisation of terms acceptable to both companies”.
The March deal was struck after Mr Ellison signalled his intention to look for opportunities in the Goldfields arising from the collapse of the nickel industry.
“This is an exciting opportunity to develop MinRes’ third lithium processing hub in the Goldfields and the first to include flotation capacity to treat fines,” the billionaire said at the time.
“We intend to bring our expertise in spodumene production to Lake Johnston, which has the potential to service projects throughout the world’s most prospective region for lithium.”
The Lake Johnston processing plant is licensed to operate to 2041 and comes with access to groundwater needed for lithium refining. The infrastructure includes an airstrip, 200-bed camp, workshops and laboratories.
MinRes said in March that repurposing a site would reduce approval timelines by about two years compared to a greenfields development, and yield big capital cost savings, without providing an estimate.
Lake Johnston figured in plans to process lithium fines from the Bald Hill and Mt Marion mines owned by MinRes along with ore from new discoveries in the region, and third-party ore in exchange for project equity.
Poseidon was previously backed by Andrew and Nicola Forrest’s private investment arm, Tattarang, but they appeared to lose interest in the nickel play in 2022 when their shareholding fell from 12 per cent to less than 5 per cent.
The Lake Johnston assets sit about 185 kilometres south-west of Kalgoorlie and include an exploration licence and mining leases covering about 86 square kilometres.
Brad Thompson writes across business and politics from Western Australia for The Australian Financial Review. Brad is based in our Perth bureau. Connect with Brad on Twitter.Email Brad at brad.thompson@copyright link
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