MinRes, Pilbara Minerals dispute escalates

Mineral Resources and Pilbara Minerals continue to lock horns over an offtake agreement for lithium mined at the Pilgangoora project, with the companies exchanging words over the ASX today.

MinRes claims that a revised asset sale agreement for lithium product mined at Pilbara’s Pilgangoora it received last week was invalid as it did not offer the same terms and conditions as what had already been offered to China-based General Lithium.

Pilbara placed its shares in a trading halt following the claim, and soon responded by arguing that the agreement was put forward to MinRes on exactly the same terms as what was offered to General Lithium.

It also follows comments made by Pilbara chief executive Ken Brinsden yesterday that the sale notice sent to MinRes was ‘rock solid’.

“We’ve spent a lot of time ensuring that it is as good of a sale notice as is possible under the agreement,” Mr Brinsden told reporters yesterday.

“Our expectation is that it is a rock solid sale notice and good for the purpose it is intended to be.

“Having said that, it is likely that we will receive some further challenge from MinRes and, should that materialise, we would likely push that sale notice to expert determination so that we can maintain a reasonable timeline around the development of our project.

“That’s a process that’s well thought through and well understood inside the sale agreement.”

The original agreement was withdrawn by Pilbara in early August in the face of legal proceedings undertaken by MinRes, which were backed by a first right of refusal held by MinRes.

MinRes acquired the first right in late June as part of its purchase of the Wodgina tantalum mine from private group Global Advanced Metals, which lies adjacent to the Pilgangoora project.

MinRes has argued that the agreement requires Pilbara to offer it the right to refuse to purchase lithium from Pilgangoora on the same terms and conditions to that offered to any other party, and in this case has not done so.

“The second sale notice does not provide an offer for MinRes to purchase lithium products on the same terms and conditions as those offered by Pilbara to General Lithium,” MinRes said.

Specifically, MinRes said it was offered a fixed price for the purchase of lithium while General Lithium was offered a variable rate, and it also wasn’t offered a right to negotiate a revision to the pricing.

“In this regard, the terms and conditions set out in the second sale notice are far more financially onerous on MinRes and fail to comply with the agreement,” MinRes said.

“MinRes has served a default notice pursuant to the Pilgangoora asset sale agreement requiring Pilbara to serve a valid notice.”

Pilbara then argued that the agreement put forward to MinRes didn’t offer a fixed price and was made on the exact same terms as what was offered to General Lithium.

“Pilbara notes that MinRes has been provided with a full and complete copy of the offtake agreement with General Lithium to allow MinRes to consider the terms it must address,” Pilbara said in a statement.

“Pilbara is confident that the sale notice has been issued is validly issued and compliant with the relevant asset sale agreement and under it MinRes can elect to exercise its right of first refusal in the context of the terms of the General Lithium offtake agreement or not.

“If the parties cannot resolve this matter satisfactorily, the company intends to refer the question of the validity of the sale notice to dispute resolution.”

MinRes shares were 2 per cent lower to $10.76 each at 12:20pm, while Pilbara shares exited a trading halt and dropped 5.1 per cent, to 51.7 cents each.