Disappointed Poseidon flags MinRes renegotiation

Poseidon Nickel says it is disappointed by a move from Mineral Resources to renegotiate the terms of its purchase of the Lake Johnston project, and will consider legal avenues.

Poseidon revealed MinRes was seeking to renegotiate the terms of its transaction for the project, announced in March, after market close on Tuesday.

The company said while it had acted to take the steps set out by an agreement between the pair and had met the conditions precedent, that MinRes had changed its stance on a deal.

“MRL has this afternoon indicated to Poseidon that it does not wish to proceed with the transaction as agreed and would instead prefer Poseidon to consider a renegotiation of terms,” Poseidon said.

“At this time, Poseidon is not aware of MRL’s reasons for wanting to renegotiate the already agreed transaction.

“The terms which have been suggested by MRL 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 said it remained open to negotiations continuing with MinRes, but that it hoped any amended transaction would be closer aligned to the original deal announced in March.

The pair entered a binding heads of agreement to divest the Lake Johnston asset that month in a deal worth $15 million plus a 0.75 per cent royalty on lithium and a 1.5 per cent royalty on other minerals.

Under the terms of that deal the pair were to finalise a formal sale and purchase agreement by today – a milestone which has not been met.

Poseidon said it was considering its legal options and will provide further updates in due course.

Chief executive Brendan Shalders said the company was disappointed by the outcome of the discussions.

“It is disappointing that MRL has sought at this late stage to amend the transaction as agreed,” he said.

“The alternative deal structure presented by MRL did not represent a compelling value proposition for Poseidon’s shareholders at this time.

“Poseidon is considering its legal position and options, but we remain hopeful that MRL will either complete the original deal as documents in the binding heads of agreement or that Poseidon and MRL will negotiate a new deal structure which reflects the value we see in the Lake Johnston project.”

MinRes previously expressed plans to turn the nickel concentrator at Lake Johnston into a lithium processing hub.

A spokesperson for the Chris Ellison-led company told Business News the company was still in the process of doing its due diligence on a deal. 

“We continue to conduct legal due diligence in relation to the Lake Johnston transaction,” they said.

“We look forward to working with Poseidon Nickel on the finalisation of terms acceptable to both companies."