Lithium joint venture to acquire Essential Metals Limited

IGO Limited announced that a Scheme Implementation Agreement (SIA) was signed by Tianqi Lithium Energy Australia Pty Ltd (TLEA), the lithium joint venture company owned by Tianqi Lithium Corporation and IGO, to acquire Essential Metals Limited (ESS).

The acquisition values ESS’s equity at A$136 million when fully diluted, which is a 36.3 per cent premium to its 30-day VWAP.

ESS is a lithium exploration firm that owns the Pioneer Dome Project in Western Australia (WA). Pioneer Dome is about 130 kilometres south of Kalgoorlie and 200 kilometres north of Esperance. The 450-square-kilometre project is located near the Mount Marion and Bald Hill lithium operations. Pioneer Dome is one of only 14 JORC-compliant spodumene lithium deposits in Australia, with a resource value of $1 billion. A JORC resource of 11.2 Mt at 1.16 per cent Li2O has been defined. ESS also has several other early-stage exploration projects in lithium, nickel, and gold.

The ESS Board of Directors unanimously recommended that ESS shareholders support the Scheme. The proposed Transaction is subject to several conditions, including approvals from ESS shareholders and the courts. The terms are detailed in the SIA, which is attached to ESS’s introduction of the Scheme today.

The Transaction provides considerable benefits to TLEA, including:

• It is consistent with TLEA’s aim of becoming a globally major lithium business;
• TLEA’s lithium portfolio in WA is being diversified and expanded;
• Secures more lithium resources, with the possibility of further expansion through future exploration; and
• Provides access to a high-potential lithium province.

TLEA’s funds will be used to fund the transaction. TLEA will delegate management of the exploration and preliminary project studies to IGO.

“Both IGO and TLC are committed to progressing and growing our lithium joint venture business. The ESS transaction provides 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. 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,” IGO Acting Chief Executive Officer Matt Dusci said. 

TLEA anticipates that the Transaction will be completed by May 2023.