Ground Breakers: Albemarle may have its tail between its legs, but don't think lithium M&A is getting any cooler

Chilean major SQM moves in on more junior lithium ground in the Pilbara

Rumours swirl MinRes wants a chunk of 2023 darling Wildcat Resources

Materials falls but graphite plays run hot

The world’s second biggest Western lithium producer Sociedad Quimica y Minera de Chile has moved to take a major stake in a new lithium JV south of an emerging spodumene discovery which could be drawing the eyes of major players.

It’s the latest salvo in a land grab on WA’s dominant lithium export industry, which has seen the industry’s established players compete with some of Australia’s richest entities for supremacy in the electric vehicle powered sector.

SQM, which has a major stake in Mark Creasy-backed billion dollar explorer Azure Minerals (ASX:AZS) and was rebuffed in a takeover bid only a couple of months ago, will emerge with 40% of the Pirra Lithium JV alongside gold producer Calidus Resources (ASX:CAI).

The Warrawoona gold project owner will retain a 40% stake of the lithium spin-off, with Haoma Mining — the controversially delisted exploration vehicle run by pollster Gary Morgan — to hold a 20% stake.

SQM has agreed to tip in $3 million for Pirra shares at an issue price of 20c a pop, paying Haoma $2.5m cash for a 30% chunk, and is also planning to spend $3m on exploration to take its stake to 40%.

Calidus, which will not seek to IPO Pirra, will retain its 40% share by tipping $2m into exploration at the project, which contains some 1411km2 of turf surrounding lithium explorers in the Pilbara.

That includes Tabba Tabba South, separated from Wildcat Resources’ (ASX:WC8) Tabba Tabba discovery by a tenement held by Hemi gold project owner De Grey Mining (ASX:DEG), 400m from where De Grey has hit lithium-bearing pegmatites in previous drilling.

“SQM’s acquisition of a large stake in Pirra is a big vote of confidence in the prospectivity of the Company’s lithium exploration acreage in the Pilbara,” CAI MD Dave Reeves said.

“With an increased landholding of over 1,411km2 in the Pilbara, Pirra is now funded to rapidly progress exploration across these tenements. An initial focus will be the Tabba Tabba South tenements which lie immediately along strike from known lithium occurrences and on a belt that hosts significant lithium resources.”

Calidus Resources (ASX:CAI) and Wildcat Resources (ASX:WC8) share prices today

SQM the latest big wig to muscle in

SQM also has interests in the region in partnership with ASX explorer Kalamazoo Resources (ASX:KZR)/a>, and will become a producer of local West Australian lithium next year when its Mt Holland JV with Wesfarmers near Southern Cross in WA’s Goldfields enters production.

Its move into the Tabba Tabba region comes on top of a reported push from competitor Mineral Resources (ASX:MIN) to try acquire a large stake in Wildcat, which looks to be onto a potential lithium discovery at the site of the old Tabba Tabba tantalum mine.

Once explored by Pilbara Minerals (ASX:PLS) before its massive Pilgangoora discovery 47km away as the crow flies, it comes after Wildcat acquired the project on the cheap from Resource Capital Funds’ Global Advanced Metals division earlier this year.

RCF, which holds over 17% of WC8 and sold the Wodgina project to MinRes a long time back, is led by James McClements. He also happens to be the MinRes chair.

MinRes and its billionaire boss Chris Ellison has shown an unwavering appetite to take bites out of the small cap apples falling off the WA lithium sector’s growing tree this year.

It has big stakes in lithium juniors Develop Global (ASX:DVP), Global Lithium (ASX:GL1) and Delta Lithium (ASX:DLI) and was recently revealed as the winning bidder for the Bald Hill lithium mine and processing plant, giving it a dominant position in the Goldfields lithium space as the operator also of the region’s largest asset, the Mt Marion JV with China’s Ganfeng.

Wildcat will be one of the table toppers on Rob Badman’s Resources Top 5 today after it announced a hit of 85m at 1.5% Li2O from 133m in a fresh hole at Tabba Tabba today, along with four other strikes upwards of 1% lithia at its now 1.5km Leia pegmatite, following up a discovery hole announced to the ASX in September.

Wildcat shares are now up almost 3000% YTD, giving the pre-resources explorer an extraordinary $600 million market cap. That is despite tumbling — but still profitable — lithium prices in 2023. Its current market cap captures how significant the shift in the profile of the industry is.

In early 2020, when the lithium industry was hobbled by oversupply, one of its largest producers Pilbara Minerals was trading at the same MC.

More and more

This all comes after the investing world gawked as a share raid from Gina Rinehart killed Liontown Resources’ (ASX:LTR) planned $6.6 billion, $3 per share sale to US lithium giant Albemarle.

The Greenbushes and Wodgina owner, which is doubling the scale of its Kemerton lithium hydroxide plant near Bunbury to 100,000tpa amid bullish internal projections on long term lithium demand from EVs, walked away after Rinehart’s Hancock Prospecting acquired a 19.9% blocking stake in a series of on-market deals at or near the offer price.

Liontown’s only option was to raise capital immediately after the news at a significant discount.

Its shares are trading at $1.83 today, down from $2.79 at the start of last week, after the company revealed plans to raise $376 million in equity at $1.80 per share, a 35.5% discount, and arrange $760 million or commercial and export credit agency debt.

Liontown was down 3.7% at midday AEDT today.

The materials sector fell almost 2% as iron ore prices tumbled 3% on Friday taking down the Pilbara giants. The biggest movers were the graphite companies including a surging Syrah Resources (ASX:SYR) fuelled by reports China would issue restrictions on exports in a move that throws a spotlight on the slow pace of Western efforts to build an alternative supply chain.