Hancock-SQM move for Azure gets green light

The Foreign Investment Review Board has given its tick to a move from a joint venture between Gina Rinehart’s Hancock Prospecting and Chilean lithium giant SQM for Azure Minerals.

The deal gives SH Mining – a joint venture between SQM and Hancock’s battery metals focused subsidiary Hanrine – federal government blessing to go ahead with its $1.7 billion move for the ASX lister.

It’s the latest in a long saga for control of Azure, which owns 60 per cent of the flagship Andover lithium project in the Pilbara and clears a major hurdle to the deal getting done.

A Supreme Court hearing in Perth tomorrow afternoon is expected to grant the final required approval on the Azure takeover deal, according to a statement from the company.

Azure shares soared 8.5 per cent in afternoon trade following the announcement.

The company was initially in the crosshairs of SQM alone, after the company purchased a cornerstone 19.99 per cent stake for $20 million in January 2023 – a bargain against the backdrop of the current deal.

It later launched a takeover offer for Azure, with the initial deal including clauses seemingly designed to protect it from the fate that befell Liontown Resources earlier in 2023.

In that instance, a move by Albemarle for the Kathleen Valley project developer was scuppered by a strategic stake bought up through Hancock, with the junior developer left to go it alone in developing the project towards a production target in the middle of this year.

Hancock did buy up a significant stake in Azure following SQM’s announcement, but would ultimately team up with the lithium major to settle on an offer for the company worth $3.70 per share – or $1.7 billion.

Azure shareholders accepted the offer earlier this month.                                  

The deal comes amid tumultuous times for the battery material, with price declines of more than 80 per cent over the past year.

Andover is prospective for both lithium and nickel, and the Tony Rovira-led company previously focused its attention on the latter at the project before pivoting to a lithium focus in 2022.

The company became a market darling in 2023 off the back of several strong lithium pegmatite intersections at Andover, entering the year with a share price around the 20c mark and watching it climb to above $4 in November.

Focused on Mexican copper since it was listed in 2009, Azure purchased its share of Andover and the Turner River gold project from legendary prospector Mark Creasy in 2020 in exchange for 40 million shares – a 19.1 per cent stake in the company.

At the time, the company said the deal was made due to uncertainty around the future of its operations in Mexico because of the Covid-19 pandemic.

“This acquisition enables the company to reduce risk by diversifying across commodities and jurisdictions, giving shareholder exposure to both the hottest gold exploration district in Western Australia and an advanced nickel-copper project,” Mr Rovira said in 2020.

It sold its Mexican assets two years later for $20 million.

On top of his significant shareholding, Mr Creasy still owns 40 per cent of Andover outright – valued at $1.1 billion based on the terms of the Hancock-SQM deal.

It also potentially represents a significant windfall for Mr Rovira, who has led the company since it listing.

Azure shares climbed 8.5 per cent, to $3.70 this afternoon.