Despite settling their IP dispute with fellow ASX listed Lepidico last week, Lithium Australia have signaled they were serious all along about their takeover bid for the company by releasing their official bidders statement last week.
In the statement Lithium Australia urges Lepidico shareholders to create a bigger, stronger group that is better placed to seize a once-in-a-cycle opportunity in the booming global Lithium market.
In a letter to Lepidico shareholders, Lithium Australia Chairman George Bauk said “….lithium is fuelling a revolution in energy storage and that demand for lithium will continue to expand rapidly over the next decade. Lithium Australia plans to establish a secure supply chain with which to deliver lithium chemicals into this rapidly expanding market.”
“The Combined Group would consolidate a large and diverse portfolio of prospective lithium exploration tenements which could potentially supply this supply chain as feedstock to Lithium Australia’s proposed hydrometallurgical processing plants.”
Lithium Australia and Lepidico share a similar business model, with both companies developing disruptive, low-cost, chemically based lithium extraction technologies known as Sileach and L-Max respectively.
Lepidico recently laid claim the Lithium Australia’s Sileach technology but dropped the case last week in an out-of-court settlement in which it agreed that Sileach was not derived from the L-Max process.
Mr Bauk said the combined group would be better able to successfully undertake the commercialisation processes required to bring the core technologies of each individual technology to market.
Lithium Australia believes the offer provides a unique opportunity to bring Sileach and L-Max into a single ownership structure, thereby fast-tracking both technologies by providing a cheaper route to commercialisation.
The company is looking to build a single pilot plant to test Sileach and L-Max in parallel, rather than two separate plants.
The aim of the merged entity would be to create a one-stop-shop for hydrometallurgical lithium extraction and production using both Sileach and L-Max processing streams on a fit-for-product basis.
The greater financial fire power of the combined entity is also given as a key benefit. Lithium Australia believes the combined group would have a stronger balance sheet and a bigger financial base to attract further support from lithium consumers and in particular from battery-makers.
With a likely market cap in excess of $50m, the merged entity would also create greater interest from institutional investors and improve the capacity to raise capital according to management.
Lithium Australia is offering one of its shares for every 13.25 Lepidico shares, which values the offer at a 13% premium to the market price just prior to its announcement.
Lithium Australia has already struck a chord with some key players, securing pre-bid acceptances from some Lepidico shareholders representing 17.76% of the target company.
Whilst both companies are technology driven entities, both hold big swathes of Lithium rich exploration ground which would put the combined entity in the enviable position post merger of being one of the largest Lithium landholders in the business.
By Matt Birney
