Not AVZ specific but certainly is with regards to the sector as...

Not AVZ specific but certainly is with regards to the sector as a whole. Recommended reading particularly  Calderwood's thoughts on the lithium sector as a whole in the second half of the article.  

Lithium anticipation rises to another level

Australia’s lithium sector was tipped to see a surge in mergers and acquisitions (M&A) and operational development this year — and so far it hasn’t disappointed.

The fanfare that has followed lithium in recent years, mainly due to forecasted demand for the manufacture of batteries and electric vehicles (EVs), has seemingly moved to the next level as companies merge, become takeover targets or consider growth projects at sites around Western Australia.
Tawana Resources’ joint venture with Alliance Mineral Assets at the Bald Hill mine has demonstrated the changing fundamentals of the sector.

A year after forming the JV at the site near Kambalda, ASX-listed Tawana and Singapore-listed Alliance moved to consolidate ownership of the operation when they revealed plans to merge in April.
The JV had launched spodumene production at the mine a month earlier, just seven months after construction started at the site. It then completed its first shipment of 3205t from the Port of Esperance in early May.

By merging, the partners hope to simplify the project’s ownership structure and operational management. The merger, still subject to approvals, is being executed through a scheme of arrangement where shareholders of both companies will hold around 50 per cent of the combined entity each.
Once completed, the merged company will trade in Australia and Singapore, with a market cap of close to $450 million.

Tawana chief executive officer Mark Calderwood describes the merger with Alliance as a “reflection of the market as a whole” where larger companies will benefit.

“The money seems to go to the bigger companies unfortunately. The funders don’t like smaller companies … they will more readily put money into company shares with a stronger balance sheet, bigger market capitalisation and better liquidity,” Calderwood tells Australian Mining.

“We will be dual-listed as well, and the only Singapore-listed lithium producer. You will end up winning more support the bigger you are … rather than being two companies producing 100,000–150,000t (of spodumene concentrate) each, we will be one company producing 200,000–300,000t, which puts us in a nice size range with turnover to make it more appealing.”

Tawana paved the way for the merger in March when it outlined plans to restructure three early-stage assets into a new company so if could add focus on Bald Hill. The company is establishing SpinCo, which will comprise the Cowan and Yallari lithium projects and the Mofe Creek iron ore project.

Calderwood believes the merger between Tawana and Alliance is an unusual deal when compared to typical mining M&A activity, as it proposes to combine two companies with a single asset.
He compares it, on some levels, to the deal Galaxy Resources did with JV partner General Mining in 2016, a transaction that created a company worth more than $700 million at the time.

That deal focused on the WA-based Mt Cattlin lithium operation, the primary asset of a JV formed between Galaxy and General a year earlier.

From a broader perspective, he says the M&A activity that has started to emerge in Australia and abroad recently may be a sign of things to come for the lithium sector.

“There is going to be some interesting tension in the industry, but I don’t know at what level though, whether it is at the production level or at the converter level in China,” Calderwood says.
“There is already some tension there. There’s people taking each other out. I suspect there will continue to be tension in the market, people sniffing around for each other.

“The market caps (of lithium companies) are on the move so it is hard for people that are looking at assets, but if you believe in the lithium price going forward there is still a lot of room for these companies.”

If this year’s wave of activity, and potential activity, in Australia’s lithium sector is any indication, then tension is certainly building, as Calderwood suggests.

Almost all of the country’s major players in the lithium industry over recent years have been involved through to mid-May.

At Western Australia’s leading lithium mine, Greenbushes, also the world’s largest operation, plans were revealed for another expansion of the site in March in response to growing demand from the battery and EV sectors.

Operator Talison Lithium is working with MSP Engineering (MSPE) on a feasibility study for further expansion of the production capacity at the mine in the state’s South West region.
Later in March, Altura Mining, which is commissioning its Pilbara lithium project, confirmed that it had been in discussions with a Chinese company in regards to a potential takeover.
Diversified mining group Mineral Resources then launched a process to sell up to 49 per cent of the Wodgina lithium project in the Pilbara.

The company’s plan to sell a stake in Wodgina followed it receiving numerous unsolicited approaches from lithium processors, battery manufacturers, international trading companies and automakers that are interested in a direct investment or securing offtake agreements.

Australia’s Kidman Resources and joint venture partner, Sociedad Química y Minera de Chile (SQM), revealed plans to build a new lithium refinery at Kwinana in Western Australia in May.
It is expected the refinery will produce about 40,000t of lithium carbonate a year, as well as lithium hydroxide from the minerals processed at the JV’s proposed mine and concentrator at Mt Holland near Southern Cross.

Kidman has also signed a three-year offtake agreement for lithium hydroxide with clean energy giant, Tesla.

Pilbara Minerals, meanwhile, remains on track to deliver first spodumene concentrate from its Pilgangoora project in the Pilbara during the current quarter.
The company also expects to make a final investment decision (FID) on an expansion of the operation during the September quarter, with a definitive feasibility study (DFS) for the growth project being prepared for a mid-2018 release.

While lithium has enjoyed significant support since prices for the commodity started to surge several years ago, it has also had its sceptics, with predictions of a bubble prevalent.
Calderwood concedes that this perception still threatens investment, but also believes it provides a positive spin for the evolving marketplace.

“It is healthy to have that. I remember the gold days when you had 95 per cent of people saying that gold is going up, but that’s when gold was finished,” Calderwood says.
“Having naysayers, you need that balance in the market I think. It keeps things healthy. You have that in most commodities now.”

Those sceptics may still be out there, however, it’s fair to say they are quieter now than in the past as the sector’s growth reaches its next stage.