Lepidico taps market for $5.7m

Takeover target Lepidico has tapped investors for nearly $5.7 million, a day after Breakaway Research recommended the Perth lithium company as a ‘speculative buy’.

Lepidico is offering investors one share for every four held in the business, at an offer price of 1.3 cents each.

The price represents a 10 per cent discount to Lepidico’s 30-day volume-weighted average price.

In a statement, Lepidico chairman Gary Johnson said the funds raised would recover costs incurred unexpectedly as a result of rival company Lithium Australia’s recently proposed $23.8 million takeover bid, and to cover costs associated with a definitive feasibility study on the first phase of its L-Max plant in Canada.

“The receipt earlier this month of the unsolicited, conditional and inadequate scrip takeover offer from Lithium has meant the company has incurred unbudgeted expenditures, requiring the company to redirect existing cash reserves to support its takeover defence,” Mr Johnson said.

“It is worth noting that as at the date of this letter, the offer from Lithium remains below market value and the board reiterates its advice to all Lepidico shareholders to take no action relating to the takeover offer.”

Mr Johnson also said Lepidico’s largest shareholder Strategic Metallurgy had notified its intention to participate in the entitlement offer and reject Lithium’s takeover proposal when it is formally put to shareholders.

It follows news yesterday that Breakaway Research had formed a recommended ‘speculative buy’ for Lepidico, based on both its L-Max technology, its plant establishment plans in Canada and takeover interest from Lithium.

Lepidico shares were 6.6 per cent lower to 1.4 cents at the close of trade today, after fruitful gains on the ASX yesterday.