Eye on Lithium: IGO and Tianqi to pick up lithium junior Essential Metals for a sweet $136m
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All your ASX lithium news for Monday, January 9.
The big news in lithium land today is that Essential Metals (ASX:ESS) has received a takeover offer from Tianqi Lithium Energy Australia (TLEA), a joint venture between China’s Tianqi Lithium and ASX listed giant IGO (ASX:IGO).
IGO and Tianqi own 51% of the Greenbushes mine in WA’s South West, the world’s largest and highest grade lithium operation, and hit commercial production at their 100% owned lithium hydroxide plant in Kwinana late last year.
The $136 million, 50c per share scheme of arrangement has been recommended by ESS’ board at a 44.9% premium to its closing price of 34.5c per share on January 6.
As Stockhead’s Josh Chiat says, it’s chump change for US$19 billion Hong Kong and Shenzhen listed Tianqi and $10.5b nickel and lithium miner IGO – but suggests producers are willing to pay a premium to get their hands on spodumene at a time when lithium raw materials are more important than ever.
ESS owns the 11.2Mt at 1.16% Li2O Pioneer Dome deposit, a little north of Norseman in WA’s Goldfields, an area where lithium speculation is growing with a host of names including Liontown Resources (ASX:LTR), FMG-backed Lightning Minerals (ASX:L1M) and Mineral Resources (ASX:MIN) fishing around.
IGO acting CEO Matt Dusci said the deal provided IGO and Tianqi with 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,” he said.
“We look forward to supporting TLEA with future work programs over the ESS assets, as the joint venture seeks to bring new resources to production to address the market deficit of raw materials critical for clean energy transition.”
A total of 61 stocks were in the green, 43 were flat and 32 were red.
Patriot has acquired three lithium prospective land packages totalling around 909km2 in greenstone belts of the Archean Superior Craton of Ontario.
The Gorman Project (506km2) is in an emerging lithium district along strike from Frontier Lithium’s (TSXV:FL) advanced PAK lithium project (41.9Mt @ 1.54% Li20), one of North America’s largest and highest grade spodumene resources.
The Forester Project (339km2) is situated south-east of the Musselwhite gold mine where drilling identified a spodumene-bearing pegmatite swarm within an area of at least 6 x 4km.
And the Birkett Project (64km2) is immediately west of the Allison Lake Batholith and associated pegmatites – which the Ontario Geological Survey has identified the district as an important new exploration target for rare-element mineralisation.
“In line with Patriot’s strategy of building, exploring and developing a high-quality portfolio of lithium assets in North America, the acquisition of the Gorman, Forester and Birkett projects provides growth to complement our active exploration programs in high-grade, hard rock districts in South Dakota and Arizona,” MD Matt Gauci said.
“It is exciting that the company has been successful in staking such a large and highly prospective land package in Ontario, including underexplored ground along strike from one of North America’s largest and highest grade spodumene resources.
“As a part of our ongoing project generation plans, we continue to evaluate a range of additional acquisition opportunities, whilst maintaining a major focus on our key asset base.”
Patriot says the compilation and assessment of the available geological, geochemical, geophysical data and historic exploration programs is set to commence in January.
Field work will commence as soon as possible after the northern hemisphere Winter and will including mapping and geochemical surface sampling, as well as remote sensing and/or geophysical surveys followed by drill testing.
The company plans to kick off resource definition drilling at the Rincon salar at its Salta Lithium Project in Argentina in Q1, 2023.
The goal is to increase the existing mineral resource – with results feeding into the recently commenced Preliminary Economic Assessment (PEA) at the project.
The drilling will consist of four to six diamond drill holes for a total of approximately 1,200 metres and will start once the current drilling program at the Incahuasi salar is finished.
“With the PEA at Rincon underway, we are excited to see the results of the Rincon Mineral Resource drilling feed into the PEA,” executive director Mena Habib said.
“We plan to complete PEA’s on the Rincon, Incahuasi and Pocitos salares, as part of our plans to fast-track the Project’s development.”
Widgie Nickel has provided assay results from 8 Reverse Circulation (RC) holes, part of a maiden 18-hole program at the Faraday Lithium prospect.
The company says initial results are encouraging.
“Lithium is now confirmed as the second major critical mineral within our tenement package which the company will progressively advance in tandem with its highly successful and ongoing nickel exploration effort,” MD Steve Norregaard said.
“Widgie looks forward into the new year with great anticipation. Two high-value, high-demand commodities with abundant exploration upside further evidence the immense value inherent in our tenement package which the company is keen to unlock.”
Infill drilling is planned for January, after which the company intends to complete a material RC drilling campaign to test the potential of the system along strike (over 400m of untested outcrop) and at depth.