Essential Metals is a publicly-listed lithium exploration company, which owns the Pioneer Dome project in Western Australia

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Essential Metals agrees to takeover by Tianqi Lithium Energy Australia. (Credit: Khusen Rustamov from Pixabay)

Tianqi Lithium Energy Australia (TLEA) has entered into a scheme implementation agreement (SIA) with Australian lithium exploration company Essential Metals (ESS) to acquire the latter in a deal worth A$136m ($94m).

Essential Metals is a publicly-listed lithium exploration company, which owns 100% of the Pioneer Dome project in Western Australia.

Tianqi Lithium Energy Australia is a 51:49 joint venture (JV) owned by Tianqi Lithium (TLC) and IGO.

Spanning an area of 450km2, Pioneer Dome is situated nearly 130km south of Kalgoorlie and 200km north of the Esperance port. It is located in close proximity to the Mount Marion and Bald Hill lithium projects.

Pioneer Dome has a defined JORC resource of 11.2 Mt @ 1.16% Li2O.

Apart from the project, Essential Metals holds various other interests in early-stage exploration assets across lithium, gold, and nickel.

The acquisition marks the foray of Tianqi Lithium Energy Australia into a highly prospective lithium province. Besides, it is said to be in line with its strategy which is centred on building a lithium business that is globally significant.

It will also help diversify and grow the JV’s lithium portfolio within Western Australia.

Tianqi Lithium Energy Australia will also gain additional lithium resources with the potential for continued growth by undertaking future exploration.

IGO acting CEO Matt Dusci said: “Both IGO and TLC are committed to progressing and growing our lithium joint venture business. The ESS 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 Train 1 of the lithium hydroxide facility at Kwinana and progressing towards the financial investment decision for Train 2.”

As per the terms of the deal, shareholders of Essential Metals will be paid A$0.5 ($0.35) per share in cash. The consideration represents a premium of 36.3% to the company’s 30-day volume-weighted average price (VWAP).

Essential Metals’ board of directors has recommended unanimously in favour of the deal.

Essential Metals managing director Tim Spencer said: “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 ~46% over the current market value of Essential shares, based on the 1 month VWAP.

“The Scheme provides certainty for Essential shareholders in the context of an uncertain economic outlook.”

The proposed deal, which is subject to Essential Metals’ shareholder’s approval, court approvals, and other conditions, is expected to close by May 2023.