The expert’s finding is the latest twist in jockeying by WA mining Rich Listers, including Chris Ellison and Gina Rinehart, for control of lithium projects clustered around the Goldfields region of Western Australia.
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.
The 1-for-6.18 deal announced on July 3 valued Essential at about $152.6 million. BDO concluded that consideration was not fair because the value of a share in the combined entity on a minority interest and diluted basis was lower than the value it ascribed to 6.18 Essential shares.
Essential’s biggest shareholder with a 19.9 per cent stake is Mr Ellison’s Mineral Resources. The Essential board unanimously supports the Develop bid.
Mr Beament said the claim of “not fair” was based on a so-called “preferred value” of the enlarged entity of $1.73 a share. “Please tell me where I can buy Develop shares at $1.73?” he said on Friday. Develop stock was trading at $3.20; Essential closed at 47¢.
“I have spent more than $10 million buying Develop shares in recent months and I paid up to $3.20 a share. And I certainly believe that I got more than fair value. It was great value.
“The deal ensures Essential shareholders retain exposure to the Pioneer Dome lithium asset, and I can assure them no company will build Pioneer Dome better or faster than Develop.”
MinRes used its stake to block a bid in April from IGO and China’s Tianqi for Essential pitched at 50¢ a share, then backed Develop in its takeover tilt. BDO agreed the Develop offer allowed Essential shareholders to retain exposure to the Pioneer Dome lithium project, in contrast to the defeated bid from IGO and Tianqi.
Mr Beament visited east coast investors this week, and the company just released a mine plan for its Woodlawn copper-zinc asset.
On top of its stake in Essential, MinRes has a 12.8 per cent interest in Develop. Both companies share a similar strategy of owning mines and providing mining contractor services.
Mr Beament, who used to run Northern Star, said Develop would push “full-steam ahead” on the Pioneer Dome and aimed to have the project shovel-ready by mid-2024.
IGO and its Chinese partner are big players in WA lithium through a 51 per cent stake in the Greenbushes lithium mine in the state’s south-west and as owners of the first lithium hydroxide plant built outside China at Kwinana, south of Perth. But they do not own any shares in Essential.
IGO and Tianqi had been willing to spend $136 million to win Pioneer Dome before being thwarted by Mr Ellison.
MinRes also flexed its muscle at Delta Lithium, where it has a 17.4 per cent interest and is a co-investor alongside Mrs Rinehart’s Hancock Prospecting.
Mrs Rinehart showed her appetite for lithium deals big and small on Friday by taking a cornerstone stake in junior lithium explorer Future Battery Minerals, in the same week she revealed a 7.7 per cent interest in Liontown Resources, the target of a takeover offer from Albemarle.
Hancock agreed to invest $2.65 million in Future Battery Minerals as part of a $7.6 million placement aimed at helping it progress the Kangaroo Hills project in the Goldfields and a project in Nevada.
