By Melanie Burton and Roshan Thomas
MELBOURNE (Reuters) -Australia’s Sayona Mining will purchase U.S.-based Piedmont Lithium in an all-stock deal that may consolidate its Canadian operations and strengthen its publicity to the North American electrical car sector, the businesses stated on Tuesday.
Below the deal, the 2 corporations will merge to create a lithium enterprise, with Sayona changing into the father or mother entity. Below the all-share transaction, Sayona is paying a 6% premium for Piedmont, based mostly on their closing share costs on Monday.
The deal marks the newest by lithium corporations to deal with a market that’s reeling from speedy provide progress that has outpaced sturdy demand projections, because the adoption of electrical autos has been slower than anticipated.
Following separate capital raisings by every firm, the mixed entity may have an estimated pro-forma market capitalisation of $623 million, with shareholders of the 2 corporations proudly owning it roughly evenly, the businesses stated.
“We’re excited concerning the alternatives this merger presents to speed up our progress plans and improve our strategic flexibility,” Sayona CEO Lucas Dow stated in an announcement.
Sayona will elevate A$40 million ($26.04 million) by a capital elevate and A$69 million by a conditional placement of shares to non-public fairness agency Useful resource Capital Funds (RCF). Piedmont will subject shares price $27 million.
The businesses have a three way partnership in Quebec, North American Lithium (NAL), which completed ramping up in June and is concentrating on 226,000 metric tons a 12 months of spodumene focus manufacturing, of which it’ll promote half to Piedmont.
NAL operated at a loss within the September quarter, in line with Sayona. The simplification of its construction in a merged entity would make it simpler to simply accept authorities or buyer assist, if wanted, a fund supervisor stated. Piedmont’s prospects embrace South Korea’s LG Chem.
Piedmont can also be growing a venture in North Carolina and is engaged on spodumene property in Ghana with Australian-listed Atlantic Lithium. Sayona additionally has lithium holdings in Western Australia.
Expectations have grown for additional consolidation within the beleaguered sector after Rio Tinto’s $6.7 billion bid for Arcadium Lithium final month.
($1 = 1.5378 Australian {dollars})
(Reporting by Roshan Thomas and Rajasik Mukherjee in Bengaluru; Enhancing by Abinaya Vijayaraghavan and Sonali Paul)
