What was announced?
Altura Mining recently fell into receivership after a collapse in lithium prices weighed on its operations and an attempt to recapitalise failed to gain support. This led to the company appointing KordaMentha as its receiver on 26 October.
After the market close on Wednesday, Pilbara Minerals revealed that it has entered into an implementation deed with the senior secured loan noteholders of Altura, which provides it with a path to potentially acquire the Altura Lithium Project through the purchase of the shares in Altura Lithium Operations for approximately US$175 million. This is subject to completion of the receivership process.
According to the release, loan noteholders have agreed to vote in favour of the Pilbara Minerals sponsored deed of company arrangement should the acquisition proceed.
Furthermore, Pilbara Minerals has the right to match any competing proposal offered for the Altura Project, and has secured payment of a break fee in the event that the receiver accepts a competing proposal, or the loan noteholders fail to vote in favour of the deed.
The upfront cash consideration of US$155 million will be predominantly funded through a future equity capital raising, which is being supported by binding equity funding commitments from both AustralianSuper and Resource Capital Fund of AS$240 million.
What is the Altura Lithium Project?
The Altura Project is a producing hard rock spodumene concentrate operation. It is located on an adjoining tenement package immediately to the west of Pilbara Minerals’ Pilgangoora Lithium-Tantalum Project.
Management notes that the operation is part of the same mineralised system that underpins the Pilgangoora Project and uses similar open-pit mining methods, processing flowsheets, and mining equipment.
It feels the combination of these factors, along with the proximity of both operations, provides a unique opportunity for Pilbara Minerals to realise tangible synergies, both immediately following the acquisition and over time.