Pilbara Minerals (ASX:PLS) is set to acquire Latin Resources (ASX:LRS) and its Brazil spodumene interests in an all-paper deal worth around $560 million.
The acquisition will expand Pilbara Minerals' global footprint in the lithium market by adding the Salinas Lithium Project to its Pilbara mining and processing operations in WA.
Latin Resources shareholders will receive Pilbara shares in a ratio of 0.07 Pilbara share (valued at $2.85) for each Latin share held. This values Latin shares at around 20 cents each—they closed at 12 cents on Wednesday.
The deal will be structured as a scheme of arrangement, resulting in existing Pilbara shareholders owning 93.6% of the new company and Latin Resources shareholders owning the remainder.
The Latin Resources board has unanimously recommended the scheme, contingent on the absence of a superior proposal and an independent expert concluding (and continuing to conclude) that the scheme is in the best interests of Latin Resources shareholders.
All directors of Latin Resources (collectively holding 4.8% of Latin Resources' total issued shares) have confirmed their intention to vote in favour of the scheme, subject to the same conditions.
Pilbara states that Latin Resources' largest shareholder, Jose Luis Manzano (holding 7.9%), has also confirmed his intention to vote in favour of the scheme, provided no superior proposal emerges and the independent expert's positive conclusion persists.
Pilbara Minerals justified the deal in a Thursday statement, asserting that the all-share consideration "is highly compelling and mutually beneficial to both companies."
"Pilbara Minerals secures Latin Resources' flagship Salinas Lithium Project, which has the potential to become a top 10 hard rock lithium operation globally (excluding Africa), located in the world-class mining jurisdiction of Minas Gerais, Brazil, with development flexibility (subject to market conditions) to supply new markets.
Latin Resources shareholders benefit from an immediate premium and unlocking of Salinas' value by de-risking funding and development through leveraging Pilbara Minerals' proven experience in developing and operating hard rock lithium projects, all while receiving immediate exposure to lithium production from Pilbara Minerals' Tier 1 Pilgangoora operation."
Pilbara claimed the deal is "an on-strategy, counter-cyclical transaction which delivers both a premium to Latin Resources shareholders and is expected to be accretive to Pilbara Minerals across a range of key metrics including net asset value, mineral resources, and future production."
