PERTH (miningweekly.com) – ASX-listed European Lithium has thrown a potential A$125-million spanner in fellow listed Mallee Resources’ plans to acquire the Avebury nickel sulphide project, in Tasmania.
Mallee earlier this year unveiled a deed of company arrangement (DOCA) to acquire Allegiance Mining, which has gone into receivership. Allegiance owns the Avebury mining licence, exploration licence, the underground mine, processing plant, mine infrastructure and other associated assets.
Under the DOCA, Mallee has offered to acquire Allegiance for A$85.9-million in a combination of cash and shares, and will also reimburse an estimated A$23.2-million in expenditure incurred in the development of the Avebury project during the DOCA term.
Mallee MD John Lamb has said that Avebury would be a transformative opportunity for the company, as it stood among the best nickel sulphide projects in Australia in terms of scale and grade.
Earlier this month, Mallee announced that completion of the DOCA was subject to shareholder approval, and the Supreme Court of Western Australia granting the deed administrators of Allegiance leave to transfer the issued capital in the company to Mallee.
The deed administrators have also made applications to the court for the transfer of the issued capital in Allegiance from Dundas Mining, which is also in liquidation, to Mallee on the effectuation of the DOCA. However, Mallee pointed out that a shareholder of Dundas has objected to the application on the basis that it would unfairly prejudice Dundas.
The application will be heard in court in early June.
European Lithium has now made proposals to the liquidators of Dundas, seeking to change the fate of the Avebury project.
The company has put forward a A$125-million cash offer. However, the offer will be subject to a number of hurdles, including the conclusion of negotiations before the June court hearing.
European Lithium noted that if Allegiance was successful in its court bid, European Lithium would be unable to advance its proposal.
Avebury is currently estimated to host a mineral resource of 29.3-million tonnes, grading 0.9% nickel and 229 parts per million cobalt. The project has been on care and maintenance since 2008, owing to the onset of the global financial crisis and the subsequent fall in nickel prices.
The project was acquired by MMG from Oz Minerals in 2009, and subsequently sold to Dundas Mining in 2016. Dundas appointed receivers and administrators in late 2021 in relation to Dundas Mining and its related parties, which included Allegiance.