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PERTH (miningweekly.com) – ASX-listed Tawana Resources on Thursday announced a merger with its joint venture (JV) partner Alliance Mineral Assets to create a midtier lithium producer with a market cap of A$446-million.
Under the terms of the merger agreement, Alliance will acquire all the issued shares of Tawana for 1.10 Alliance shares for every Tawana share held.
Following the implementation of the scheme, Tawana will become a wholly-owned subsidiary of Alliance, with Alliance shareholders holding a combined 51% interest in the merged group, while Tawana shareholders will retain a 49% interest.
Tawana told shareholders that the merger provided the potential for a simplified single-ownership structure for the Bald Hill project, in Western Australia, which was currently the subject of a JV agreement between the two companies.
The merged entity would also have a strong balance sheet, with both the capacity and flexibility to pursue additional exploration initiatives on the combined tenement package, and to pursue project expansion opportunities, as the market demanded.
“Tawana and Alliance are an excellent and natural fit, given existing JV-owned assets and operational expertise,” said Tawana chairperson Robert Benussi.
“Both companies have successful track records of creating substantial value for shareholders and, together, we will retain this focus. Our ability as a merged group to capture future growth opportunities in the high growth lithium market, will be significantly enhanced.”
He noted that the share exchange ratio was calculated on the basis of a merger of equals, adjusting for each company’s working capital, cash and debt position.
The merger was subject to a number of conditions, including regulatory and shareholder approvals.
Tawana recently announced a spin-off of its Cowan and Yallari lithium projects, in Western Australia, and the Mofe Creek iron-ore asset, in Liberia, into a wholly owned public company, before undertaking a capital and distribution by way of an in-speci distribution of 85% of the new company’s shares to Tawana shareholders.
This spin-out transaction and the merger agreement remained independent of each other, and were not inter-conditional, Tawana said.
Meanwhile, Tawana on Thursday also announced that it was conducting a A$20-million underwritten share placement to institutional and sophisticated investors, with the company also reserving the right to raise a further A$5-million in a conditional placement.
The shares issued through the Tawana placement will represent around 11.4% of the company’s fully diluted shares on issue, prior to the offer. The placement will be priced at 41c a share.
Alliance will also look to raise A$25-million from a share placement to sophisticated and institutional investors, with an additional A$7.8-million to be raised from a non-underwritten share placement to existing shareholder Burwill.
Alliance’s share placement will be priced at 33c a share, with the shares on issue making up 17.2% of its fully diluted shares on offer prior to the offer.
Funds raised will be used to continue the commissioning of the Bald Hill lithium and tantalum project, as well as to cover capital expenditure on feasibility and expansion projects, and to provide funding for future exploration and other initiatives at the Bald Hill project.