MinRes takes a shine to takeover target

Mineral Resources has taken up a substantial stake in ASX-listed Essential Metals, a lithium explorer currently in the crosshairs of Tianqi Lithium and IGO.

The Chris Ellison-led company has bought up 19.55 per cent of Essential for $27 million, making it a new substantial holder on the target's register. 

The shares were acquired under Lithium Resources Operations Pty Ltd.

Shares in the explorer have risen about 17 per cent since yesterday morning amid the interest, from 50 cents to 58 cents. 

MinRes' growing lithium business includes Mt Marion - held in a joint venture with Jiangxi Ganfeng Lithium Co - and Wodgina, operated under the MARBL lithium joint venture with Albemarle.

It comes as Essential shareholders gear up to vote on a scheme of arrangement under which Tianqi Lithium and IGO would acquire 100 per cent of shares in its target at 50 cents each.

MinRes' new position as a substantial shareholder is likely to throw a spanner in the works for the planned takeover. 

The offer on the table for Essential implies an equity value of about $136 million.

Essential owns the Pioneer Dome lithium project south of Kalgoorlie.

The West Perth-based company released updated drilling results in December showing a large increase in the indicated resource to 8.6 million tonnes of ore with 105,000 tonnes of contained lithium.

Essential has been preparing a scoping study on the project while evaluating development options.

Its directors have opted for the certainty of a cash offer at a big premium to the latest share price rather than pursue development independently.

The bidding vehicle is Tianqi Lithium Energy Australia, owned 51 per cent by China’s Tianqi Lithium Corporation and 49 per cent by ASX-listed IGO.

The joint venture already owns 51 per cent of the giant Greenbushes lithium mine and 100 per cent of the Kwinana lithium refinery.

Essential has appointed Sternship Advisers as financial adviser and HopgoodGanim Lawyers as legal adviser.

TLEA has appointed Grant Samuel as financial adviser, Clayton Utz as legal adviser and KPMG as tax and accounting adviser.