Pilbara Minerals’ $371m takeover of Latin Resources: What this game-changing acquisition means for the lithium industry

Australian lithium mining company Pilbara Minerals has announced a major acquisition of Latin Resources in a binding scheme implementation agreement (SIA) valued at approximately A$559.9 million (US$371 million). This all-share transaction will see Latin Resources’ shareholders receive 0.07 new Pilbara Minerals shares for each share they hold, marking a 57% premium over Latin Resources’ 10-day volume-weighted average price (VWAP) of A$0.127 (US$0.084) per share.

Strategic Value of the Acquisition

This acquisition is poised to significantly bolster Pilbara Minerals’ portfolio by giving it full control of Latin Resources’ Salinas lithium project, located in the mining-rich region of Minas Gerais, Brazil. The Salinas project is projected to become one of the top 10 hard rock lithium operations globally, thanks to its high-grade spodumene deposits. This acquisition aligns with Pilbara Minerals’ strategy to expand its lithium resources in response to the surging global demand for lithium, driven by the electric vehicle (EV) market and renewable energy storage.

Company Background and Previous Acquisitions

Pilbara Minerals, headquartered in Perth, Australia, has been a notable player in the global lithium market. The company is renowned for its flagship Pilgangoora lithium-tantalum project, one of the largest and highest-grade hard rock lithium deposits in the world. Pilbara Minerals has a history of strategic acquisitions and partnerships aimed at enhancing its lithium production capabilities. In 2021, the company acquired a 50% interest in the Altura Lithium Project, adding significant value to its lithium portfolio. This acquisition of Latin Resources further consolidates Pilbara Minerals’ position as a leading lithium supplier and represents a strategic move to secure high-quality lithium resources.

Pilbara Minerals to acquire Latin Resources for $371 million, gaining control of the Salinas lithium project in Brazil

Latin Resources, also based in Australia, has been actively developing its lithium assets with a focus on expanding its resource base. The company’s Salinas lithium project, located in Minas Gerais, Brazil, has been a cornerstone of its growth strategy. Latin Resources has previously announced various developments aimed at advancing the project, including a preliminary economic assessment (PEA) that highlighted the potential for a large-scale, high-grade lithium operation. The company is currently working on a definitive feasibility study (DFS) for the Salinas project, which is expected to provide a comprehensive evaluation of the project’s economic viability and development potential.

Details on the Salinas Lithium Project

The Salinas project is particularly significant due to its substantial spodumene reserves. According to the PEA released by Latin Resources, the project is expected to produce an average of 499,000 tonnes of spodumene concentrate annually over an initial mine life of 11 years. This production level positions the Salinas project as a major player in the global lithium supply chain. The ongoing DFS and fast-tracked permitting for stage 1 are crucial steps towards finalising the development of the project. Pilbara Minerals will have the opportunity to make a final investment decision (FID) once these steps are completed, potentially setting the stage for significant growth in lithium production.

Statements from Company Leaders

Dale Henderson, Managing Director and CEO of Pilbara Minerals, underscored the strategic nature of the acquisition. He noted that the deal is a key part of Pilbara Minerals’ strategy to diversify and strengthen its global lithium supply portfolio. Henderson highlighted that acquiring the Salinas project would introduce Pilbara Minerals’ second fully-owned Tier 1 hard rock lithium asset, expected to be cost-effective and beneficial for shareholders. He also pointed to the opportunity for expansion into new markets, such as Europe and North America, as a result of this acquisition.

Chris Gale, Managing Director of Latin Resources, expressed enthusiasm about the merger, describing it as a significant opportunity for Latin Resources’ shareholders. Gale praised Pilbara Minerals’ expertise and the potential benefits of the partnership for the Salinas project and Latin Resources’ Brazilian subsidiary, Belo Lithium. He mentioned his positive experiences with Pilbara Minerals’ Pilgangoora mine and expressed confidence in the acquisition’s positive impact on Brazil’s mining industry.

Expected Timeline and Next Steps

The scheme is expected to be implemented in late November or early December 2024, contingent on approval from Latin Resources’ shareholders and the court. This timeline is consistent with Pilbara Minerals’ strategy to advance its lithium portfolio and capitalize on the growing demand for lithium resources.