The transaction will deliver a significant premium to Essential Metals shareholders, in addition to ongoing exposure to the Pioneer Dome lithium project and future upside from the combined company with a market capitalisation of A$771.3m.
Develop Global to acquire Essential Metals. (Credit: Joe from Pixabay)
Develop Global has signed a Scheme Implementation Deed (SID) to acquire 100% of Australian mining exploration company Essential Metals for around A$152.6m ($101.31m).
Under the terms of the SID, Essential Metals shareholders will receive one new Develop Global share for every 6.18 Essential Metals shares held, which implies a price of around A$0.56 ($0.37) per share.
The purchase price represents a premium of 34.9% to the closing price of Essential Metals shares of A$0.415 per share, as on 30 June 2023.
Essential Metals Board of Directors unanimously recommended that the Scheme is in the best interests of its shareholders in the absence of a superior proposal and subject to an Independent Expert.
Essential Metals’ largest shareholder, Mineral Resources (MinRes), has agreed to vote its 19.55% shareholding in favour of the scheme.
Develop Global managing director Bill Beament said: “This agreement delivers Essential shareholders a highly attractive premium of 34.9% to the closing price of Essential shares on 30 June 2023 as well as a host of other significant benefits.
“They will retain ongoing exposure to the upside at the Pioneer Dome Lithium Project. They also stand to benefit enormously from Develop’s ability to unlock the value of Pioneer Dome in a timely and efficient manner by capitalising on Develop’s outstanding operational/mine building team and extensive funding capability.”
“In addition to the benefits relating directly to Pioneer Dome, Essential shareholders will gain exposure to Develop’s energy transition metals assets and mining services division, the strong track record of its team, future cashflows and the ability to capitalise on further growth opportunities in this space.”
Upon implementation of the scheme, Essential Metals shareholders will hold 18.4% of the combined entity, which is estimated to have a market capitalisation of A$771.3m.
The market capitalisation is calculated based on the Capital Raising price of A$3.20 per Develop share and around A$81.7m cash consideration.
The transaction is expected to deliver several significant benefits to Essential Metals shareholders.
Essential Metals is enabled to retain its ongoing exposure to the development of the Pioneer Dome Lithium Project in Western Australia.
The mining company will gain exposure to Develop Global’s Woodlawn and Sulphur Springs energy transition metals assets, along with its cash-generating mining services division.
Furthermore, Essential Metals will benefit from Develop Global’s advanced mining team, balance sheet, future cashflows and access to funding, which will further de-risk the development of Pioneer Dome.
Pioneer Dome is a hard rock lithium development asset, located 130km south of Kalgoorlie, in Western Australia’s Lithium Corridor.
It has a Mineral Resource of 11.2Mt at 1.16% Li2O, on which a positive Scoping Study has been completed and a Project Feasibility Study is currently underway.
Essential Metals managing director Tim Spencer said: “The Scheme announced today provides Essential shareholders with an exciting opportunity to join the rapid growth trajectory of a substantial diversified battery and energy transition metals group.”
“In addition to delivering a significant premium, the Scheme, if approved and implemented, will allow Essential shareholders to retain ongoing exposure to the development of our flagship lithium asset at Pioneer Dome as part of a much larger diversified resources group.”