Pilbara Minerals is diversifying its assets with the acquisition of Latin Resources for approximately A$559.9M (US$369.4M). Latin Resources shareholders will receive 0.07 new Pilbara shares for each share they hold, valuing Latin Resources shares at A$0.20 each, a 66.7% premium to their last closing price.
Commenting on the scheme, Pilbara Minerals’ managing director and CEO, Dale Henderson, said: “We are excited to announce the acquisition of Latin Resources. This acquisition is on-strategy, diversifying the business with what we believe is a counter-cyclical, accretive extension that further builds out Pilbara Minerals’ position as one of the leading lithium materials suppliers globally. The acquisition will deliver our second 100% owned, Tier 1, hard rock lithium asset, which is expected to be low-cost and accretive for our shareholders. It provides Pilbara Minerals with optionality to sequence new supply and diversify into new growth markets for lithium such as Europe and North America. The acquisition follows an extensive period of project assessment globally in which we rank Latin Resources’ Salinas project at the top of our list when benchmarked holistically across a range of key criteria.”
Following the announcement, Latin Resources shares surged an impressive 56%. The acquisition will give Pilbara control of Latin Resources’ Salinas lithium project in Brazil and access to the North American and European battery markets.
Analysts have mixed views on the deal, citing challenges in convincing the market about the diversification into Brazil and limited operational synergies. Pilbara’s shares dropped 6.7% after the announcement. The Latin Resources board has recommended the deal in the absence of a better offer.
“Further, a comprehensive due diligence period has been conducted over the past six months which has built-out our understanding of the asset and the region’s potential. Importantly, the acquisition leverages Pilbara Minerals’ capability in hard rock lithium resource delineation, project development, operations and marketing experience. We would like to acknowledge the success of Chris and all the Latin Resources team on the remarkable work completed in advancing the Salinas project to date. The group have successfully stewarded the development of the Salinas project to a meaningful scale in what has been a short period since the asset’s discovery in 2022.” Added Dale.
