JOHANNESBURG (miningweekly.com) – Lithium miners Galaxy Resources and General Mining on Monday announced they would merge, creating a diversified lithium company with assets in Australia, Argentina and Canada.

The companies said in a joint announcement that the merger would be implemented by way of Galaxy acquiring General Mining in an off-market takeover, which valued the company at A$216-million.

General Mining shareholders would receive 1.65 new Galaxy shares for each share held, representing a 9.4% premium to the ten-day volume-weighted average price and a 13.5% premium to the 20-day volume-weighted average price.

Shares in Galaxy and General Mining, which are joint venture (JV) partners in the Mt Cattlin project, in Western Australia, surged on the announcement, with General Mining trading 16% higher and Galaxy gaining 12%.

The companies reported that the merger would simplify the ownership structure and operational management of the assets currently owned in the Mt Cattlin JV.

Besides the Mt Cattlin mine, which would start spodumene and tantalum production in the third quarter of this year, the merged entity would also own the Sal De Vida lithium brine project, in Argentina, and the James Bay hard rock project, in Quebec.

“We are extremely pleased that the joint venture arrangement we entered into with General Mining in 2015 has resulted in a merger proposal that makes sound strategic sense and, importantly, gives the shareholders of both Galaxy and General Mining the opportunity to participate in the upside of a merged lithium company of global significance,” commented Galaxy chairperson Martin Rowley.

Rowley would remain as chairperson of the combined group and Galaxy’s Anthony Tse as the MD. General Mining executive chairperson Michael Fotios would be offered a position as a director on the board of the combined group.

Following the implementation of the offer, General Mining was expected to become a wholly-owned subsidiary of Galaxy, with current Galaxy and General Mining shareholders holding 71% and 29%, respectively, of the enlarged Galaxy.

The offer, which would close in the third quarter, was subject to typical conditions, including 90% minimum acceptance, among others.

The directors of General Mining have recommended the transaction and indicated that they would accept the offer for all the shares they controlled.

General Mining shareholders representing 4.94% of the company’s shares had entered into binding prebid acceptance agreements. Combined with Galaxy’s existing holding of 1.91% of General Mining shares, Galaxy had a relevant interest of 6.86% in the takeover target.