China’s Zijin Mining to acquire Canada’s Neo Lithium in $737m all-cash deal

Zijin has agreed to pay C$6.50 per share in cash for the Argentina-focused lithium company, Neo Lithium, the companies stated in a joint release.

Neo Lithium Corp got listed on the Toronto Stock Exchange of Canada on 8 October 2021.

Zijin Mining, through a wholly-owned subsidiary incorporated in Canada, has agreed to acquire all of the issued and outstanding common shares of Neo Lithium for consideration of C6.5 per share in cash. The consideration for the transaction is approximately C$960 million (equivalent to approximately RMB4.939 billion).

The share price represents a premium of approximately 18 per cent over the closing price of C$5.49 per share of Neo Lithium on 8 October 2021 as quoted on the TSX Venture Exchange, and a premium of approximately 36 per cent over Neo Lithium’s 20-day volume-weighted average price per share.

The consideration payable for the transaction is based on the company’s adequate due diligence of the assets held by Neo Lithium from a technical, financial, legal and other perspective, and was determined based on the company’s careful assessment on its value, taking into account Neo Lithium’s stock price, and the offer prices in comparable transactions and customary commercial terms, the companies stated.

The core asset of Neo Lithium is the Tres Quebradas Salar lithium brine lake project located in Catamarca Province in the northwestern part of Argentina. The project is rich in resources, high-grade, low-impurity, and has favourable development conditions and relatively large potential for production expansion. Neo Lithium holds all interest in the 3Q project through Liex SA, its wholly-owned subsidiary incorporated in Argentina.

As at 30 June 2021, Neo Lithium had 141,344,654 common shares issued and outstanding and 8,855,000 stock options outstanding in total. According to public information, the top five shareholders of the company are: Contemporary Amperex Technology Co Limited, Orn & Cie SA, Waldo Perez, Gabriel Pindar and BlackRock Inc, which parties hold approximately 8 per cent, 5 per cent, 4 per cent, 4 per cent and 3 per cent of the shares, respectively.

The core asset of Neo Lithium is its 100 per cent interest in the 3Q lithium brine lake project in Argentina. The project is located in the southern end of the renowned “Lithium Triangle” in the Puna Plateau, which is in the southwestern region of Catamarca Province, the largest lithium production area in Argentina.

The transaction does not constitute a connected transaction or a material asset restructuring of the company. The board of directors of the company has considered and approved the transaction, and does not require the approval of the company’s shareholders at a shareholders’ general meeting the release stated.

The acquisition is subject to approval at a special meeting of shareholders of Neo Lithium as well as effective approvals, notices or waivers from the government of the People’s Republic of China or its authorised departments, and the relevant regulatory authorities and courts in Canada.

The transaction will be completed pursuant to a plan of arrangement under the Business Corporations Act (Ontario). The transaction will be subject to the approval of 66? per cent of the votes cast by Neo Lithium shareholders that are present and vote at the special meeting of shareholders. In addition to the shareholder approval at the special meeting of shareholders, the transaction is subject to, but not limited to, the receipt of effective approvals, notices or waivers from the government of the PRC or its authorised departments, and the relevant regulatory authorities and courts in Canada, and the satisfaction of other closing conditions customary in transactions of this nature.

In August, Chinese gold and copper miner Zijin said its plan on lithium and other new energy minerals were in a preliminary strategic planning stage with no detailed time frame or specific projects yet.

The deal comes after Chinese battery maker Contemporary Amperex Technology Co (CATL) last month agreed to acquire Canada’s Millennial Lithium Corp in an all-stock cash deal worth C$376.8 million ($302.33 million).

Last year, CATL also purchased more than 10 million shares of Neo Lithium Corp and became the company’s third-largest shareholder.