Lithium Americas (TSX:LAC) Makes Unconditional $400M Bid for Millennium Lithium

Cauchari-Olaroz. Source: Lithium Americas

Lithium Americas (TSX:LAC) announced on Monday they have decided to make an unconditional offer to obtain all of the outstanding shares from MilleniumLithium at $4.70 per share. The total offer sits around $400 million, and would result in an approximately 9.9% ownership of Millenium Lithium for shareholders, according to Friday’s prices. 

About a month earlier in late September, China’s Contemporary Amperex Technology Co. (CATL), which is the world’s leading EV battery manufacturer, was shown to have been the highest bidder for Millenium Lithium. They created an offer of a total cash consideration of approximately C$377 million ($297m), which would be C$3.85 per share, however, Lithium Americas now has the highest offer. 

The Millenium Lithium board has deemed this as the “superior offer” and has given CATL 10 business days to respond or match the offer if it chooses to do so. 

Millenium Lithium has two non-producing lithium brine projects in Northern Argentina, which are the Cauchari East and Pastos Grandes lithium projects. The Cauchari East project is situated in the heart of the lithium triangle, which makes less of an impact on the environment while providing high-quality lithium. The Pastos Grandes project has had 23 wells drilled and covers a total of 12,619 hectares. Combined, these two projects have 4.12 million tonnes of lithium carbonate equivalent (LCE) in measured and indicated resources.

Other than their recent bid, Lithium Americas also has new and ongoing developments. The Company and its partner Ganfeng Lithium are currently developing the Caucharí-Olaroz lithium project in Jujuy province, Argentina. The project is expected to enter production in Q3 2022, and development is already underway for the Stage 2 expansion. 

Cauchari-Olaroz

The Caucharí-Olaroz project actually got its name from the two salars in northwest Argentina where the project is located. It has an annual production capacity of 40,000 tonnes lithium carbonate equivalent (LCE) over a projected mine life of 40 years, but the stage 2 expansion is expected to add at least 20,000 tpa of production capacity to the operation, starting in 2025.

Jonathan Evans, CEO of Lithium Americas said in a news release: “In proximity to Caucharí-Olaroz, Millenium’s 100%-owned Pastos Grandes lithium brine project represents an attractive regional growth opportunity for Lithium Americas. As we bring Caucharí-Olaroz into production over the next year and continue to advance our Stage 2 expansion planning, the addition of this highly complementary lithium brine resource further enhances our long-term growth strategy in Argentina and leverages our technical and development expertise.”

Lithium Americas also has a second project on the go called the Thacker Pass, which is the largest known lithium resource in the United States. It is located in Nevada and already has a mine life of 46 years. This mine is actually located within an extinct supervolcano called the McDermitt Caldera, which formed 16.3 million years ago. 

The Era of Lithium-Ion

Lithium is so important and widely used in everyday items such as mobile phones, remotes, laptops, digital cameras, and electric vehicles. It is used for making rechargeable lithium-ion batteries which all of these items heavily rely on. It is also used to make items without rechargeable batteries such as pacemakers and clocks. 

The price of lithium spiked suddenly at the beginning of 2021 due to the high demand of the electric vehicle market. As long as this market remains in high demand and production stays steady, the need for lithium remains strong. As the trend of electric vehicles continues, lithium also plays a part in clean energy technology. 

Lithium has a higher energy density and a longer lifespan than other metals and batteries, which is why it is great for efficient energy storage and electric vehicles. This high demand for products with rechargeable batteries and the electric vehicle movement is a great thing for lithium miners because it shows the market and demand are not slowing down any time soon.  

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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