Lithium Americas (TSX:LAC) has agreed to buy all the shares it doesn’t own of Arena Minerals (TSXV:AN). The deal values Arena at $227 million and will give Lithium Americas expanded access to the Pastos Grandes basin in Argentina. Arena Minerals shareholders will receive 0.0226 of a Lithium Americas common share for every Arena share. After the deal is completed, Arena Minerals investors will own approximately 5.7% of Lithium Americas.
Ganfeng Lithium, GFL International, and their affiliates currently own roughly 16% of Arena Minerals’ outstanding shares, and if their warrants were exercised, this would give them a further 6% stake. Ganfeng has now entered an agreement to dispose of its securities of Arena before the merger closes.
The companies expect the deal to close in Q3 2023, as Lithium Americas is going through a business transformation during this period. The company is looking to separate its North American and Argentine businesses into two separate and independent public companies. The new Lithium Americas company will be led by current CEO Jonathan Evans and will own the Thacker Pass lithium project in Nevada as well as other investments in Ascend Elements and Green Technology Metals (ASX:GTI).
This acquisition will combine the two projects operated by the companies in the Pastos Grandes basin, on the Argentine side of South America’s lithium triangle. Located close to Lithium Americas’ Cauchari-Olaroz, the brine project is expected to enter production in the first half of 2023.
Chief executive officer Jonathan Evans commented in a statement: “The significant synergies between our two projects and a better understanding of the basin will enable us to advance development planning and maximize our growth pipeline in Argentina.”
The second new company will be focused on the assets in Argentina, including Pastos Grandes and Cauchari-Olaroz. The new company will be called Lithium International.
Lithium prices are one of the most resilient commodities, and the acquisition is expected to benefit Lithium Americas in the long-term. The company has been focusing on producing battery-grade lithium, and the acquisition will give them access to more resources and potential opportunities in the lithium market.
Spodumene prices are up 257% YTD, averaging approximately $5,900 per tonne for 6% concentrate Australian free on board price in November 2022. While prices have been rising in 2022 after a very bullish 2021, prices are expected to fall in 2024 as the market stabilizes slightly.
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