Western Lithium and Lithium Americas are to merge in a deal that will combine two significant lithium deposits in North and South America.
Under the agreed deal, Western Lithium will acquire all of the outstanding shares of Lithium Americas in an all-stock transaction that values Lithium Americas at approximately C$80 million (£40 million). The combined entity will have a capitalisation of more than C$150 million (£75 million).
In a joint statement the companies said the goal of the merger was to establish market leadership and develop future lithium supply requirements in a disciplined manner, reshaping the current fragmented lithium development sector.
Western Lithium is developing its Kings Valley, Nevada, deposit, while Lithium Americas is developing an operation at Cauchari-Olaroz in Argentina.
The companies said the combined entity would control two assets that were globally important to support the burgeoning lithium-ion battery market. It would also allow better management of development timelines to match production supply with growing market demand.
“The merged company will hold two of the leading lithium development projects in the world,” said Western Lithium chief executive Jay Chmelauskas. “We believe this combination will also result in better liquidity, market capitalisation and funding opportunities.”
John Kanellitsas, chief executive of Lithium Americas, said: “Manufacturers of lithium-ion batteries are increasingly looking for alternative sources of lithium supply, particularly as they build-out major production facilities.”
“We are creating a combined entity that will pursue innovative process technology with a goal of producing improved lithium products than compared with traditional sources of supply. This transaction is occurring at an important inflection point for the sector, with the strong fundamentals all coming into focus from the continued growth of electrified vehicles, consumer and industrial energy storage, and consumer electronics using lithium-ion batteries.”
The transaction has been approved by the boards of directors of both Western Lithium and Lithium Americas. It will require approval by at least two thirds of the votes cast by the shareholders of Lithium Americas. It is also subject to approval by a simple majority of shareholders of Western Lithium.
The deal is expected to be completed in early September.