Tianqi lithium industry is on the road to expansion again after it achieved higher-than-expected profits and got rid of high debt last year.
On January 9, Tianqi Lithium Industry announced that in order to further expand its lithium ore reserves, the company's controlling subsidiary TELA plans to buy all shares of Australian listed company Essential Metals Limited (ESS) for A $0.50 per share, a total of about A $136 million, or about 632 million yuan at the midpoint of the January 4 RMB exchange rate.
Upon completion of the transaction, TLEA will hold 100 per cent of the shares issued by ESS.
The consideration represents a premium of about 45 per cent to the last closing day of ESS, and ESS shares soared 41 per cent in early trading on Monday.
ESS owns 100% of the Pioneer Dome lithium project, the Juglah Dome gold project and the Golden Ridge gold project.Among them, the total amount of lithium ore resources is 11.2 million tons, and the average lithium oxide content is 1.16%. In the basic case, the estimated utilization rate of available resources is 55%, that is, 6.19 million tons; in the optimistic case, the utilization rate of available resources is 71%, that is, 7.9 million tons.
Tianqi Lithium Industry said that based on the resources estimated by the existing exploration depth of the ESS Pioneer Dome lithium project, the mine life of the ESS Pioneer Dome lithium project is 6.19 years. With the expansion of the scope and depth of exploration in the future, the life of the mine may also be prolonged with the increase of reserves in the future.
According to the current timetable, the Pioneer Dome mine may not start production until after 2025, but ESS said Tianqi Lithium has the capital and experience to speed up the process.
Matt Dusci, acting chief executive of IGO, a TELA joint venture, said the deal "provides an opportunity to speed up lithium exploration and put new resources into production".
Tianqi Lithium owns a majority stake in Western Australia's Greenbushes, one of the world's largest lithium mines, and is the first operator to build a battery-grade lithium hydroxide refinery in Australia.