01/12/2020 - 17:04

Pilbara strikes Altura deal

01/12/2020 - 17:04

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Pilbara Minerals has moved closer to gaining control of Altura Mining’s key asset after striking a $US175 million agreement with the lithium miner’s receivers and managers.

Pilbara Minerals is set to acquire Altura's Pilgangoora lithium project.

Pilbara Minerals has moved closer to gaining control of Altura Mining’s key asset after striking a $US175 million agreement with the lithium miner’s receivers and managers.

The share sale agreement with KordaMentha’s Richard Tucker and John Bumbak provides for the acquisition of Altura Lithium Operations Pty Ltd, which owns Altura’s Pilgangoora lithium project.

Pilbara owns an adjoining lithium project with the same name and anticipates big efficiency gains from putting them together.

Pilbara Minerals has also proposed a Deed of Company Arrangement (DOCA) with Cor Cordis partners Cliff Rocke and Jeremy Nipps, in their capacity as administrators of Altura.

Under the DOCA, Pilbara will contribute A$6 million (up from $A4 million) to a fund to support the entitlements owing to Altura employees who have been made redundant since it’s mining project was placed on care and maintenance one month ago.

The increased contribution is provided on the basis that Altura’s second creditor’s meeting is held no later than 11 December to facilitate Pilbara’s planned capital raising.

KordaMentha said the share sale agreement and DOCA proposal follow a formal sale process it ran for the Altura project.

Altura’s directors have been working on their own recapitalisation plan but have not updated the market.

Pilbara said today its DOCA needs to be approved at a meeting of Altura’s creditors.

This is likely as Pilbara has already struck an agreement with Altura’s senior secured loan noteholders – the same creditors that put Altura into receivership.

If the DOCA is not approved, Pilbara has a back-up agreement with the noteholders to buy Altura’s Pilgangoora project via an asset sale agreement with the receiver.

Completion of the asset sale is not conditional on the DOCA being approved.

Pilbara also needs to complete a A$240 million equity raising.

This is almost assured as it is underwritten by AustralianSuper, private equity group Resource Capital Funds and Macquarie Capital.

The pricing of the capital raising, at 36 cents per share, was set on 28 October when Pilbara announced plans to acquire the Altura project.

Since then, Pilbara’s share price has nearly doubled to 75 cents per share.

 

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