SQM, Gina Rinehart's Hancock Agree to Buy Azure for $1.1 Billion — Update

By Rhiannon Hoyle

Chilean lithium company Sociedad Quimica y Minera de Chile and Australia's richest person have struck a deal to buy explorer Azure Minerals valued at roughly 1.70 billion Australian dollars (US$1.14 billion).

Azure said Tuesday that it has entered a binding agreement with Chile's SQM and Gina Rinehart's Hancock Prospecting, which intend to jointly acquire its stock for up to A$3.70 a share in cash.

That agreement replaces an earlier deal between SQM and Azure, which was announced in October and valued at up to A$3.52 a share in cash. Azure said its directors unanimously recommend the offer, so long as a better one isn't made and an independent expert finds it in the best interests of shareholders.

Lithium has become one of the hottest commodities in global mining as governments push to electrify their economies, despite prices for the silvery white metal falling sharply this year. Lithium is used in electric vehicles, smartphones and other applications.

An International Energy Agency report on EV battery supply chains last year estimated that another 50 average-size lithium mines would be required by 2030 to meet climate pledges.

Azure owns a majority stake in the Andover lithium project in Australia's mineral-rich Pilbara mining region, where Rinehart's Hancock runs a large iron-ore mining business.

Azure reported that Hancock had taken a large stake in company a day after SQM's October bid. Earlier that month, Hancock scuttled a planned takeover of Liontown Resources by Albemarle, acquiring enough stock to frustrate the American lithium giant's intention of buying the Australian company.

At A$3.70 a share, the joint offer for Azure is a 64% premium to its 10-day volume-weighted average stock price before the earlier SQM agreement was made public, said Azure. Shares in the Perth-based company were trading 1.4% higher by midday in Sydney at A$3.68 a share.

"The transaction delivers a fantastic outcome for Azure shareholders, including a significant uplift in value from the original SQM transaction despite elevated market volatility and the recent deterioration in lithium prices," said Azure Managing Director Tony Rovira.

Lithium prices have slumped this year, following a two-year rally to record highs, as growth in electric-vehicle sales slowed and lithium supplies increased.

SQM and Hancock already own a combined 38% of Azure.

Two of Azure's other large shareholders--Creasy Group, which owns roughly 13%, and Delphi Group, which owns about 10%--each intend to back the deal, Azure said. The closely-held Creasy Group owns 40% of the Andover project.

Azure said it expects a meeting of shareholders to vote on the deal will take place in mid-March and, if approved, the acquisition will be completed soon after.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

December 18, 2023 20:46 ET (01:46 GMT)

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