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NEWS

Lepidico rejects takeover offer

Lepidico Ltd was fighting hard to stave mineralisation the two companies are
off a takeover bid from Lithium Aus- looking for.

tralia NL at the time of print. “L-Max is founded on relatively straight-

The target has remained firm in its forward and very robust chemistry. Lithi-

stance that shareholders should reject um Australia’s process technologies are

what it has described as an “opportunis- aimed at cracking spodumene via much

tic” takeover bid of one Lithium Australia more complex hydro-metallurgical pro-

share for every 13.25 Lepidico shares. cesses. They have also not disclosed the

At the centre of the takeover bid is reagents they are using and they are also

Lepidico’s L-Max processing technol- using a mystery catalyst that they haven’t

ogy, which has encouraged the likes of yet made public as to what that is.

Pioneer Resources Ltd, Crusader Re- “We have been extremely transparent

sources Ltd and Latin Resources Ltd to in our public statements, we have pro-

partner with the company. Joe Walsh vided a full suite of project fundamen-

Lithium Australia has its own Sileach tals and costs – opex and capex – in our

extraction technology for spodumene de- Lepidico’s closing price of 1.4c/share on PFS, whereas Lithium Australia has pro-

posits and has also formed partnerships March 28. vided very little definition surrounding its

with lithium hopefuls Parkway Minerals A research note from Breakaway Re- assets and work programmes.”

NL and Pilbara Minerals Ltd. search recommended a “speculative Parkway has sold its 18% stake in Le-

At the time of print, Lithium Australia buy”. pidico into Lithium Australia’s takeover

declared its takeover offer unconditional “The company has access to valuable bid, however, major shareholder Strate-

after receiving acceptances from all par- technology which could create a leading gic Metallurgy Pty Ltd continues to throw

ties pursuant to the pre-bid acceptance position in the lithium market in years to its support behind the target.

agreements. This will make the Adrian come,” it said. “Successful implementa- In its bidder’s statement, Lithium Aus-

Griffin-led company the largest share- tion of its Phase 1 project [a commercial tralia said a combined group, containing

holder of Lepidico at 17.86%. L-Max processing plant] could provide both the L-Max and Sileach technologies

However, Lepidico managing director a 3.4 times share price uplift as it ap- as well as a suite of lithium exploration

Joe Walsh said his company did not per- proaches first production and its current projects, would be better placed to gain

“ceive any benefits for its shareholders to value is underpinned by the Lithium Aus- market support.
accept Lithium Australia’s offer. tralia takeover offer.” “A combined group will have a strong-

“We have been asking the er balance sheet which will

question internally of why ...why has Lithium Australia provide a strengthened fi-
has Lithium Australia chosen chosen to undertake this offer nancial base with which to
to undertake this offer at this attract further support from

point in time and question at this point in time and question lithium consumers, and in
whether it is out of despera- particular battery-makers,”
whether it is out of desperation due to the company said.
tion due to their business

model being something they their business model being something Walsh conceded the take-
are not able to deliver on,” over bid had created a minor

Walsh told Paydirt. they are not able to deliver on. distraction for his company,
“I think it’s highly oppor- but it was still pushing ahead

tunistic. I think Lepidico is with a DFS on a small-scale

streets ahead of Lithium Australia in In its target statement, Lepidico also commercial L-Max plant, processing lith-

commercialising its technology. It’s going argued that a combination with Lithium ium-mica concentrate.

to be fascinating to see how this plays Australia “makes no strategic sense” and A PFS completed in February found a

out.” the scrip offer would expose Lepidico 3.6 tph operation could produce about

Upon learning of Lithium Australia’s shareholders to “substantial risks” asso- 3,000 tpa of battery-grade lithium car-

proposed takeover in early February, ciated with the bidder’s business model, bonate, as well as a suite of by-products,

Lepidico engaged independent advi- which Walsh said had multiple flaws. for $US35-40 million development capi-

sory firm BDO Corporate Finance (WA) “It’s clear that Lepidico and Lithium tal, with nil or negative C1 cash costs af-

Pty Ltd to review the offer, which was Australia have starkly different business ter by-product credits.

deemed to be “neither fair nor reason- models and I think that can be identified DFS work is set to be funded from a

able” by the tax and audit specialists. by looking at a number of different areas; current entitlement offer which Lepidico

BDO rated Lepidico’s fair value be- namely quality, simplicity, focus, trans- hopes will raise up to $5.6 million.

tween 1.6c/share and 2.1c/share, with a parency and risk,” Walsh said. Recent test work from the Pioneer

preferred value of 1.8c/share, and val- “Lepidico is focused on deposits of Dome project, near Norseman, also pro-

ued the 13.25 Lepidico shares between high-quality, high-grade lepidolite. By duced a high specification battery-grade

21.2c/share and 27.8c/share. At the time contrast, Lithium Australia has stated lithium carbonate with 99.7% purity using

of print, Lithium Australia’s stock was that it is seeking stranded, low-grade the L-Max technology.

trading at 14c/share, implying an offer spodumene deposits, so there’s a clear – Michael Washbourne
price of 1.1c/share, a 24.5% discount to difference in the quality of the source of

PAGE 8 APRIL 2017 AUSTRALIA’S PAYDIRT