Develop Global lobs bid for lithium junior Essential Metals

Under the binding scheme of arrangement, each Essential shareholder would receive one new Develop share for every 6.18 Essential shares held, implying a value for the lithium junior of 56¢ a share and a fully diluted equity value of $152.6m.

It represents a premium of almost 35 per cent based on Essential’s closing price of 41.5¢ on Friday.

The transaction has been unanimously recommended by Essential’s board in the absence of a superior offer and by the company’s largest shareholder MinRes (19.55 per cent), which has agreed to vote in favour of the scheme, subject to an independent expert’s report.

It comes after Essential Metals fended off a proposed $136m takeover offer by IGO and Tianqi, with MinRes and other shareholders voting down the 50¢-a-share cash scheme of arrangement at a meeting in April.

Mr Beament said the transaction delivered Essential shareholders a “highly attractive premium” and would give them ongoing exposure to the upside at the still-to-be-developed Pioneer Dome lithium project, located 55km north of Norseman.

Essential shareholders would hold 18.4 per cent of the combined group, which would have a market capitalisation of $771.3m, upon implementation of the scheme.

“They also stand to benefit enormously from Develop’s ability to unlock the value of Pioneer Dome in a timely and efficient manner by capitalising on Develop’s outstanding operational/mine building team and extensive funding capability,” Mr Beament said in a statement.

If approved, he said the scheme would allow Essential shareholders to become part of a diversified battery and energy transition metals group, “reducing the risks associated with being a single-asset development company.”

Essential managing director Tim Spencer said: “Develop’s world-class mining team is ideally placed to unlock the value of Pioneer Dome in a timely and efficient manner, while Develop’s balance sheet, future cash-flows and access to funding will further underpin and de-risk the development strategy for Pioneer Dome.”

Develop also announced it was raising $50m at $3.20 a share via a placement and accelerated rights issue to help fund the transaction, accelerate the development of Pioneer Dome and also advance its Woodlawn base metals mine in NSW towards a restart.