Pilbara Minerals Limited ("Pilbara Minerals") and Latin Resources Limited ("Latin Resources") are pleased to announce that they have now entered into a binding Scheme Implementation Agreement (SIA). Under this agreement, Pilbara Minerals will acquire 100 % of the shares in Latin Resources through a Court-approved scheme of arrangement.
Highlights:
- Strategic Acquisition: Pilbara Minerals will acquire Latin Resources, including its flagship Salinas Lithium Project, located in Minas Gerais, Brazil. This project has the potential to become a top 10 hard rock lithium operation globally (excluding Africa).
- All-Share Consideration: Latin Resources shareholders will receive 0.07 new Pilbara Minerals shares for every Latin Resources share that is held, which equates to an implied offer price of A$0.20 per share, and represents a 57 % premium to the 10-day volume-weighted average price (VWAP).
- Significant Upside: The acquisition of the Salinas Lithium Project has the potential to contribute to the pro-forma Pilbara Minerals by:
- adding ~20 % to Pilbara Minerals’ Mineral Resources;
- contributing up to ~30 % of pro-forma steady state production upon Salinas achieving steady state production (at a cost base that is expected to be competitive with Pilgangoora).
- Enhanced Market Position: Latin Resources shareholders will gain exposure to Pilbara Minerals’ Tier 1 Pilgangoora Operation, and they will benefit from enhanced market positioning, increased liquidity, and access to capital markets.
- Leadership Continuity: Latin Resources’ Managing Director, Chris Gale, will join Pilbara Minerals for 12 months, acting as a consultant to provide leadership continuity and further assist with progressing key activities at the Salinas Project.
Commenting on the agreement, Pilbara Minerals’ Managing Director & CEO, Dale Henderson stated: “We are excited to announce the acquisition of Latin Resources. This acquisition is on-strategy, diversifying the business with what we believe is a counter-cyclical, accretive extension that further builds out Pilbara Minerals’ position as one of the leading lithium materials suppliers globally.
The acquisition will deliver our second 100 % owned, Tier 1, hard rock lithium asset, which is expected to be low-cost and accretive for our shareholders. It provides Pilbara Minerals with optionality to sequence new supply and diversify into new growth markets for lithium such as Europe and North America.
The acquisition follows an extensive period of project assessment globally in which we rank Latin Resources’ Salinas project at the top of our list when benchmarked holistically across a range of key criteria. Further, a comprehensive due diligence period has been conducted over the past six months which has built-out our understanding of the asset and the region’s potential. Importantly, the acquisition leverages Pilbara Minerals’ capability in hard rock lithium resource delineation, project development, operations and marketing experience.
We would like to acknowledge the success of Chris and all the Latin Resources team on the remarkable work completed in advancing the Salinas project to date. The group have successfully stewarded the development of the Salinas project to a meaningful scale in what has been a short period since the asset’s discovery in 2022. We also thank the State of Minas Gerais and the local Salinas community for their continued support for the Salinas project. One of the reasons Pilbara Minerals was attracted to Latin Resources was the strong foundation of community support that has been established to date. We look forward to working alongside the Latin Resources team, and other key stakeholders, as we develop Salinas to its full potential and we are delighted Chris will be joining our team to continue the development journey of the project.”
Latin Resources’ Managing Director, Chris Gale, added: “I am extremely excited and proud that our achievements in Brazil have attracted such a high quality company in Pilbara Minerals to Salinas. I have spent time at Pilbara Minerals’ Pilgangoora mine, met with the Pilbara Minerals team and I’m in no doubt that Pilbara Minerals’ expertise’ in lithium mining will be an enormous benefit not only to Latin Resources and its 100 %-owned Brazilian subsidiary, Belo Lithium, but to Brazil itself. Brazil’s Lithium Valley will now well and truly be on the world’s global lithium map as one of the best lithium mining jurisdictions in the world.
The Scheme announced today provides Latin Resources shareholders with an exciting opportunity to become shareholders in the world’s largest pure play hard rock lithium producer, diversified across Tier 1 projects in Australia and Brazil.
In addition to delivering an attractive premium, this transaction allows Latin Resources shareholders to retain ongoing, but significantly de-risked, exposure to the development of Salinas as part of a larger, more diversified enterprise with a strong balance sheet, cashflow generation and technical expertise, all of which will support the successful development and operation of Salinas.
The Latin Resources Board is extremely proud of the hard work and achievements of the Latin Resources team and the significant progress made in advancing Salinas to its current pre-development status.
Along with members of my executive management team, I was very pleased to be asked to commit to continue to work with Pilbara Minerals to advance the Salinas project towards production and I’m excited about the future prospects for our project in Brazil when combined with Pilbara Minerals’ existing asset base.
Along with my fellow directors, I had no hesitation in supporting this Scheme and I am very much looking forward to working with Dale and the Pilbara Minerals team to unlock the full potential of Salinas.”
Next Steps:
The Scheme is subject to shareholder approval from Latin Resources shareholders, as well as Court approval, and other conditions that are customary for the process. If approved, the Scheme is expected to be implemented in late November or early December 2024. Latin Resources plans to divest its non-core assets before the Scheme is implemented.