PERTH (miningweekly.com) – Battery minerals producer IGO on Monday announced that its lithium joint venture (JV) with Tianqi Lithium Corporation, Tianqi Lithium Energy Australia (TLEA) had made a A$136-million takeover offer for Western Australia-focused lithium explorer Essential Metals.

TLEA, which is 49% owned by IGO, has entered into a scheme implementation agreement with Essential Metals to acquire the company for 50c a share in cash, representing a 36.3% premium to Essential’s 30-day volume weighted average share price.

Essential’s board of directors has unanimously recommended that shareholders accept the offer, with the directors announcing their intention to vote in favour of the scheme in the absence of a superior offer and subject to an independent expert concluding that the offer is in the best interest of shareholders.

IGO on Monday said that the transaction would deliver significant benefits to TLEA, including building on its globally significant lithium business, diversifying and expanding the JV’s lithium portfolio in Western Australia while also securing additional lithium resources with the potential for continued growth through future exploration. The transaction will also offer TLEA entry into a highly prospective lithium province.

Essential owns the Pioneer Dome lithium project, which includes the Dome North mineral resource of 11.2-million tonnes at 1.16% lithium oxide. The company also holds the Juglah Dome gold project and the Golden Ridge gold project, both within Western Australia, as well as a JV interest in a number of gold and nickel projects in the region.

“Both IGO and Tianqi Lithium are committed to progressing and growing our lithium JV. The Essential transaction provides an opportunity to accelerate lithium exploration to bring new resources to production. It also complements the significant growth opportunities within the TLEA business which include the continued expansion of the Greenbushes operation, the successful ramp-up of Train 1 of the lithium hydroxide facility at Kwinana and progressing towards the financial investment decision for Train 2,” said IGO acting CEO Matt Dusci.

"We look forward to supporting TLEA with future work programmes over the Essential assets, as the JV seeks to bring new resources to production to address the market deficit of raw materials critical for clean energy transition.”

The scheme is subject to a number of conditions, including Essential shareholder approval at a scheme meeting scheduled for April.

“The scheme announced today provides Essential shareholders with an opportunity to realise an attractive cash amount of A$0.50 per Essential share, reflecting a compelling premium of some 46% over the current market value of Essential shares, based on the one-month volume weighted average price. The scheme provides certainty for Essential shareholders in the context of an uncertain economic outlook,” said Essential MD Tim Spencer.

“We believe this transaction is a great outcome for Essential shareholders and for other stakeholders including employees, suppliers, the Ngadju people and the state of Western Australia, all of whom will benefit from the Pioneer Dome lithium project being developed by a large, well financed and experienced lithium sector participant such as TLEA.

“The board is extremely proud of the hard work and achievements of the Essential team and the significant progress made in advancing the Pioneer Dome lithium project to its current pre-development stage,” he added.