Gina Rinehart takes 18% stake in Azure Minerals

It's feeling like a case of deja vu for investors in the lithium industry.

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It's official. Gina Rinehart has been scrambling to buy shares in another ASX lithium share that has received a takeover approach.

Last week, Rinehart's purchase of a blocking stake in Liontown Resources Ltd (ASX: LTR) scuppered its takeover by Albemarle Corp (NYSE: ALB).

Australia's richest person may now be hoping to do the same with Azure Minerals Ltd (ASX: AZS), which accepted a takeover offer from Sociedad Quimica y Minr de Chile SA (NYSE: SQM) this week.

According to an initial substantial holder notice, Rinehart and Hancock Prospecting have been able to build up a position totalling 81,562,214 Azure Minerals shares. This equates to an 18.3% stake.

The notice reveals that Rinehart has been buying shares for some time, but upped her purchases on Thursday with a $188.9 million transaction. This was then followed by a $21.25 million purchase on Friday.

What's going on?

As with its Liontown purchases, Hancock Prospecting hasn't revealed what its intentions are and is just highlighting the risks involved with project development and its track record. A media release states:

Hancock Prospecting Pty Ltd (Hancock) is pleased to announce that it has acquired a strategic stake of 18% of the ordinary shares (Strategic Stake) in Azure Minerals Limited (Azure). Azure owns 60% of the Andover lithium project in West Australia (Andover). Andover is in its exploration phase, with encouraging results from initial drilling but more work is required to estimate a mineral resource and evaluate its potential. Consistent with early stage projects that are pre-resource, while Andover shows good prospects, it has a long path and significant risks to navigate before its ultimate potential is known. Hancock is an established West Australian company with the capacity to support and expedite development.

Hancock's investment focus is long term. Hancock has a history of successful domestic and international partnerships across resources and agriculture – including at Roy Hill (partnering with POSCO, Marubeni and China Steel), Hope Downs (partnering with Rio Tinto), S. Kidman & Co (partnering with Shanghai CRED) and multiple earlier stage exploration projects with a range of other partners. In each case, those businesses have benefited from the collective skills and expertise of the partners.

Is Azure Minerals' takeover on the rocks?

What this means for the SQM takeover offer, time will tell. But it is worth noting that SQM's $3.52 per share offer is conditional on "no shareholder, other than SQM, acquiring greater than a 19% interest in Azure."

Rinehart isn't far from surpassing this threshold and could easily get there on Monday.

Though, SQM does have a backup, its $3.50 per share off-market takeover, which will need 50.1% acceptance. While this would give it majority ownership, it would need to oust Rinehart if it wanted to make the takeover compulsory.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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