Millennial Lithium Corp. [ML-TSXV, MLNLF-OTCQB, A3N2-Frankfurt] said Friday it has entered into a definitive agreement Ganfeng Lithium Corp. [GNENF-OTCQX, 1772-HK] that will result in all of the outstanding shares of Millennial being acquired by Ganfeng for $353 million in cash.
Ganfeng, which currently ranks as China’s largest lithium compounds producer, has agreed to acquire the shares through a British Columbia subsidiary by way of a plan of arrangement for $3.60 per share.
“Millennial is pleased to receive this offer from Ganfeng, one of the largest lithium producers,” said Millennial President and CEO Farhad Abasov in a press release, Friday.
“Millennial’s board and management believe that the arrangement provides a very attractive opportunity for Millennial’s shareholders to realize full liquidity at a substantial premium to the current share price.’’
Millennial is focused on the development of its flagship lithium brine project, Pastos Grandes, which is located in Salta in the Lithium Triangle of Argentina. Lithium producers in the Triangle include SQM, Albemarle Corp. [ALB-NYSE], Livent Corp. and Orocobre Ltd. [ORL-TSX, ORE-ASX].
The project covers over 14,000 hectares of the Pastos Grandes Solar, 213 kilometres from the city of Salta at an elevation of 3,800 metres.
Millennial recently completed a feasibility study on the Pastas Grandes project, which yielded proven reserves of 179,000 tonnes of lithium carbonate equivalent (LCE) and probable reserves of 764,000 tonnes of LCE.
The economic analysis from the feasibility study yielded robust economics for a 24,000 tonne per year battery grade LCE with a forecast capital expenditure of $442 million. Pilot plant and pilot pond trials are ongoing at the project.
Abasov said the arrangement announced on Friday fully validates the efforts of the Millenial team in the past four years advancing Pastos Grandes through exploration to resource estimate, preliminary economic assessment, definitive feasibility study, and ultimately a highly successful pilot pond and plant operations where the company has achieved 99.96% purity battery grade lithium carbonate production.
He said Ganfeng would bring significant technical lithium expertise to Pastos Grandes gained through their partnership with Lithium Americas Corp. at Cauchari and other projects worldwide.
Millennial said Ganfeng is paying a significant premium for the shares of approximately 21% over the 20-day average closing price of $2.98. The all-cash offer is not subject to a financing condition.
Ganfeng has entered into voting support agreements with directors and senior officers of Millennial and with Millennial’s largest shareholder representing an aggregate of approximately 17% of the shares outstanding.
On Friday, Millennial shares rose 2.7% or $0.09 to $3.41 on volume of 493,740. The shares are currently trading in a 52-week range of $5.25 and $1.20.
It is widely anticipated that demand for the vehicle battery metal will increase sharply over the next several years as automakers shift their focus away from internal combustion engines to electric vehicles.
Brines (in salt ponds) and spodumene (hard rock) represent the two main sources of commercial lithium production.