Major Chinese battery manufacturer CATL (SHE: 300750) is set to purchase Millennial Lithium (TSXV:ML) in a CAD$377 million all-cash deal that received unanimous approval from the miner’s board of directors.
The deal, which will see CATL purchase 100% of Millennial’s stock @ CAD$3.85 per common share comes after the company terminated an earlier arrangement agreement with Ganfeng Lithium. Under the terms of the earlier agreement, Ganfeng had the right to match any subsequent superior proposal, which it chose not to exercise.
The price offered by CATL represents a ‘significant’ 29% premium over Millennials’s 20-day average closing price of CAD$2.98
The deal will also see CATL reimburse Millennial for a USD$10 million termination fee payable for exiting the Ganfeng agreement.
The price offered by CATL represents a ‘significant’ 29% premium over Millennials’s 20-day average closing price of CAD$2.98, and a 6.9% premium to the Ganfeng offer.
The deal, which is subject to regulatory approvals, is expected to close by January 2022.
Pastos Grandes Lithium Project
Millennial’s flagship Pastos Grandes Lithium Project encompasses 12,619 hectares in Argentina’s Salta Province, positioning the company as the major player in the ‘expansive’ salt flats.
The company has invested over CAD $40 million in exploration and development work at the project, with a production capability expected within 3 years.
Exploratory drilling at the project has indicated that lithium brine is present to ‘far greater depths’ than originally anticipated, with a resource estimate released in 2019 delivering the following results:
A 2018 feasibility study completed by WorleyParsons Chile S.A. delivered a ‘proven’ lithium carbonate output of 179,000 tonnes equivalent over the first 8 years of the project, followed by ‘probable’ 764,000 tonnes equivalent over the 9 to 40 year period. This represents an average annual output of 23,575 tonnes across the life of the project.
CATL moves to consolidate lithium supply
News of the deal comes less than a week after Australian lithium producer AVZ Minerals (ASX: AVZ) reported that it had secured a USD$240 million cornerstone investment for its Manono Lithium Project from a company associated with CATL and Chinese billionaire Pei Zhenhua.
A shortage in lithium supply is expected to increase as major auto manufacturers ramp up electric vehicle production. Benchmark Mineral Intelligence Managing Director Simion Moores believes that the lithium supply deficit in 2025 will be larger than total industry output in 2016.
Images: Millennial Lithium Corp.
