LONDON (Alliance News) - Rare Earth Minerals PLC Wednesday said that Western Lithium USA Corp, in which it holds a 3.1% stake, is joining forces with Lithium Americas Corp to consolidate strategic lithium deposits in North and South America.
The natural resource investment company said that Western Lithium will acquire all outstanding shares of Lithium Americas under the agreement in an all-stock transaction that values the company at approximately CAD80 million.
Rare Earth said that the combined entity will control two large and geographically diversified development stage lithium projects, and will generate revenue from its subsidiary Hectatone in 2015 followed by potential revenue from the Cauchari-Olaroz project in Argentina under a two-year development timeline and from the Kings Valley project in Oregon under a four-year development timeline.
Under the agreement, Lithium Americas' shares will be exchanged on the basis of one share for 0.789 of a Western Lithium share. Western Lithium will also settle all of Lithium Americas' in-the-money options and warrants, as well as certain change of control payments otherwise payable in cash, using the same exchange ratio calculation, Rare Earth said.
Upon completion, existing Western Lithium shareholders and Lithium Americas security holders will own approximately 50.05% and 49.95% of the combined company, respectively.
"The lithium market is approaching an important inflection point for the sector, with the strong fundamentals driving a rapidly increasing demand, with little additional supply capacity from the traditional producers," Rare Earth Chief Executive Kiran Morzaria said in a statement.
This merger along with Albermale's acquisition of Rockwood Holdings earlier this year for USD 6.2 billion is part of a trend to find synergies in technology, management and assets that will allow the economic development of lithium assets and fill the anticipated supply gap," he added.
Shares in Rare Earth were trading up 3.6% at 0.927 pence Wednesday morning.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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