Australia-based mineral exploration company Azure Minerals has formally confirmed the receipt of interest from Sociedad Química y Minera de Chile (SQM) regarding a potential takeover.

The company owns around a 60% stake in the Andover lithium project in the Pilbara region of Western Australia.

It has previously received several expressions of interest from SQM, and the most recent one is dated 12 July 2023, for an indicative offer price of $2.31 cash per Azure share.

Azure rejected SQM’s offer, which represents a total consideration of A$901.4m ($584.7m), citing the growing potential of the Andover Lithium Project.

The offer is non-binding and is highly conditional, including the due diligence, FIRB approval, and certain other key commercial assumptions, said the Australian mining company.

Azure, in its statement, said: “Azure determined that the approaches did not warrant further engagement by the company and no further discussions have occurred.”

“The relationship with SQM remains both supportive and constructive as Azure continues to work towards further delineating the lithium potential of Andover.

“As previously announced, the company is targeting a maiden Mineral Resource Estimate for Andover in the first quarter of 2024.”

Azure has contracted Barrenjoey Capital Partners and Corrs Chambers Westgarth to provide financial and legal advice in relation to the expressions of interest from SQM.

In January this year, Azure announced that SQM Australia is set to invest up to A$20m ($13.8m) in the company, to acquire a 19.99% interest, under a two-stage transaction.

In the first tranche of the transaction, SQM would subscribe 16,381,720 ordinary shares of Azure at a price of A$0.2564 per share, which enables Azure to raise A$4.2m.

The second tranche is contingent on the satisfaction of certain conditions, including completion of due diligence investigations, and Azure signing an offtake agreement SQM.

In exchange, SQM can offtake 25% of all lithium products in which Azure has an interest.

The strategic investment from SQM is expected to support the lithium mining and processing operation at its majority-owned Andover project, said Azure.