American based startup, EnergyX, has made an impressive US$150M offer for Galan Lithium’s assets in Argentina in a bid to snap up the EV battery metal while prices are wavering. The bold bid includes cash, shares in EnergyX, project financing, and a royalty payment.
Currently, negotiations are ongoing, with the details first being reported by the Australian press – with headlines such as ‘Texas-headquartered EnergyX lobs US$150M bid for Galan Lithium’ drawing attention. Yet, the Perth based Lithium miner is keeping its cards close to its chest, only releasing a statement to clarify that the proposal from EnergyX is to acquire assets and real property held by Galan related to its holdings in Salar del Hombre Muerto and Candelas for US$50M in cash, and common shares in EnergyX which the company values at US$50M.
The ASX release states: EnergyX is a corporation incorporated under the laws of Puerto Rico and its securities, including its common shares, are not quoted or traded on any stock exchange. Under the Proposal EnergyX would also provide:
- US$50M which would not be payable to Galan but rather to EnergyX’s wholly owned subsidiary which would own the project assets, with those funds to be committed and wholly dedicated to completing the first commercial phase of lithium production at Hombre Muerto West and maintaining the project assets
- A 10% gross revenue royalty to Galan for 10 years starting from commercial production. Galan has been seeking to negotiate a confidentiality agreement with EnergyX in respect of the Proposal. The confidentiality agreement currently sits with EnergyX
The proposal is conditional on all the typical processes associated with such an offer, including the completion of satisfactory due diligence, negotiation, and execution of definitive, binding transaction documentation.
Additionally, the proposal remains subject to consideration by Galan’s board and given the early stage nature of discussions and its conditionality, there is no certainty a that the bid will go ahead. Given the proposal contemplates the disposition of Galan’s main undertaking, Galan shareholder approval would be a necessary.
