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Australia’s Mineral Resources gains on $1.15bn Albemarle deal

22nd November 2018

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The share price of ASX-listed Mineral Resources (MRL) increased by more than 26% on Thursday after the company signed an exclusivity agreement with US major Albemarle over the potential sale of a 50% interest in the Wodgina lithium project, in Western Australia.

Albemarle is expected to pay $1.15-billion in cash for its 50% interest in Wodgina, and will fund the acquisition with available cash and new credit facilities, the company said.

“This agreement is consistent with our corporate strategy of pursuing merger and acquisition opportunities that can accelerate and de-risk our organic growth strategy,” said Albemarle’s CEO Luke Kissam.

“We feel confident in leveraging this world-class lithium resource with an experienced and knowledgeable mining company like MRL to help meet the growing demands of our global customers.”

Under the terms of the exclusivity agreement, the two companies will work to execute a binding transaction by December 14, allowing Albemarle to acquire a 50% interest in all mineral rights within the Wodgina tenements, other than iron-ore, which MRL will retain, and tantalum, which is held by Global Advanced Metals Greenbushes.

The parties will form a joint venture (JV) which will be managed by a special purpose vehicle, with MRL expected to enter into a number of contracts with the JV, including to build, own and operate the crushing contract for all run-of-mine ore feed for the spodumene concentration plant, to operate and maintain the accommodation camp and airport, and to manage haulage and logistics.

MRL is currently mining direct shipping ore at Wodgina and progressing its openpit pre-strip and constructing its spodumene concentrate plant.

The JV is expected to produce up to 750 000 t/y of 6% spodumene concentrate from the project, which will ultimately be used as feedstock for a planned lithium hydroxide plant, once it has been constructed.

The lithium hydroxide plant will be jointly funded, designed and built by the JV partners, with the first stage of the plant expected to produce at least 50 000 t/y of lithium hydroxide, with construction to start as soon as the necessary licences and approvals are in place.

The second stage of the plant will convert the remaining volume of spodumene concentrate into lithium hydroxide, doubling production to at least 100 000 t/y of lithium hydroxide, subject to market demand.

Albemarle is expected to manage the marketing and sales of the lithium hydroxide produced by the JV, and will make its proprietary lithium hydroxide plant designs available for the JV.

MRL MD Chris Ellison said on Thursday that the agreement with Albemarle followed a global sales process for the Wodgina lithium project, which was first announced in May this year, which resulted in strong interest being received from a range of global participants in the battery minerals and chemicals value chain.

“I am confident that with MRL and Albemarle working together at Wodgina, we will produce and supply high-quality, competitively priced lithium products into the market to meet increasing global requirements for these important energy storage products,” Ellison said.

“MRL is widely recognised as a leading provider of mining services and mine site operations in Australia, along with having a high-quality mine-to-ship logistics supply chain in the Pilbara.

“Our proven local Western Australian capability is extremely well complemented by Albemarle’s proven technical downstream processing expertise and their international marketing capabilities in lithium and other energy storage minerals.”

MRL traded at a high of A$16.50 a share on Thursday, up from a low of A$14.50 a share.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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