Lithium deals continue heavy metal run as stocks drop
Heavyweight proxy advisers have given the green light for a takeover of lithium explorer Essential Metals, as activity in the sector heats up with Gina Rinehart building a significant stake in Liontown Resources.
The proxy advice from Institutional Shareholder Services is the latest twist in jockeying by mining billionaires – including Chris Ellison and Mrs Rinehart – for control of lithium projects in Western Australia.
Gina Rinehart was shopping for Liontown shares again on Tuesday evening. Trevor Collens
Despite lithiumspot prices more than halving from record highs this year, Mr Ellison and Mrs Rinehart’s activity in the sector indicates they remain bullish on the outlook for lithium, a key material necessary for powering electric vehicles and battery storage.
Mr Ellison’s Mineral Resources is the biggest shareholder in Essential via its 19.9 per cent stake and supports Develop Global’s merger proposal.
On top of its stake in Essential, Mineral Resources has a 12.8 per cent interest in Develop Global.
ISS said the merger would give shareholders exposure to Essential’s Pioneer Dome lithium project along with Develop Global’s copper, zinc and nickel assets in NSW. This would provide more access to liquidity and capital markets, mitigating the risk associated with being a single-asset firm.
But ISS warned a key risk to shareholders is the exact monetary value of the merger is not certain and will depend on the price at which Develop Global’s shares trade on the ASX after the implementation date.
The ISS advice comes after the independent expert, BDO, said Develop Global’s all-scrip offer for Essential and its Pioneer Dome lithium project near Kalgoorlie was not fair but was reasonable.
A court date to approve the scheme
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