Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

Western Areas/IGO: Will BHP Crash The Party?

Investors Caught Out As Twiggy Backs IGO's Offer For Western Areas

Western Areas: IGO Firm On Pricing As Nickel Soars

Quiddity Advisors

Event-Driven

After a downturn in the price of the battery commodities and a reduction in tonnes exported, mining consolidations are back in vogue as miners take big bets on electric vehicles, as demand and prices increase for battery minerals.
<ul style="list-style-type: circle;">
<li>February last year, <a href="https://www.smartkarma.com/entities/wesfarmers-ltd" target="_blank" data-smartkarma-citation="entities:1104:1" rel="noopener">Wesfarmers Ltd (WES AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02342610-6A1020764?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">said</a> it would proceed with the development of a new lithium mine and processing hub in WA. The Mt Holland lithium project is a JV with <a href="https://www.smartkarma.com/entities/soc-quimica-y-minera-chile-b" target="_blank" data-smartkarma-citation="entities:24555:1" rel="noopener">Soc Quimica Y Minera Chile-B (SQM/B CI)</a>. Wesfarmers expects to lay out ~$950mn developing the mine, concentrator, and refinery (in Kwinana). A final investment decision was <a href="https://www.wesfarmers.com.au/util/news-media/article/2021/04/15/green-light-for-lithium-project" target="_blank" rel="noopener">announced</a> in February this year. </li>
<li>In <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02320079-6A1011583?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">December</a> last year, <a href="https://www.smartkarma.com/entities/igo-ltd" target="_blank" data-smartkarma-citation="entities:462:1" rel="noopener">IGO Ltd (IGO AU)</a> formed a JV with China’s <a href="https://www.smartkarma.com/entities/sichuan-tianqi-lithium-industries-inc" target="_blank" data-smartkarma-citation="entities:5698:1" rel="noopener">Tianqi Lithium Corporation  (002466 CH)</a>, paying $US1.4bn to acquire a 24.99% stake in the Greenbushes lithium mine in Western Australia. The mine produces ~2% of the world's spodumene concentrate from a hard rock lithium mine. The JV also includes a 49% stake in the downstream lithium hydroxide plant in Kwinana near Perth. The JV was formed after Tianqi faced an increasing debt obligation after the decline in lithium prices. Tianqi maintained a 26% stake in Greenbushes and a 51% stake in the hydroxide plant.
<ul style="list-style-type: circle;">
<li>This was a large bet, transforming IGO into a battery mineral and renewable energy play, away from its copper and gold heritage.  The deal was funded by debt and an A$766mn equity raise including a $446mn fully underwritten placement at $4.60, and a $320mn 1-for-8.5 pro-rata entitlement offer. The offer price represented a 9.7% discount to IGO’s last traded price.</li>
<li>The transaction was completed on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02390039-6A1038822?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">30 June</a>. Around two months earlier, IGO <a href="https://www.australianmining.com.au/news/igo-sells-tropicana-stake-for-903m/" target="_blank" rel="noopener">sold</a> its 30% stake in the Tropicana gold mine joint venture for A$903mn.</li>
<li>Separately, IGO withdrew its takeover offer to <a href="https://www.smartkarma.com/entities/panoramic-resources-ltd" target="_blank" data-smartkarma-citation="entities:15960:1" rel="noopener">Panoramic Resources (PAN AU)</a> in <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02190245-6A961368?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">January</a> last year, citing a breach of conditions.</li>
</ul>
</li>
<li>
<a href="https://www.smartkarma.com/entities/pilbara-minerals-ltd" target="_blank" data-smartkarma-citation="entities:7460:1" rel="noopener">Pilbara Minerals (PLS AU)</a> acquired <a href="https://www.smartkarma.com/entities/altura-mining-ltd" target="_blank" data-smartkarma-citation="entities:13385:1" rel="noopener">Altura Mining (AJM AU)</a> late last year after the latter entered receivership in November.</li>
<li>
<div>
After circling each other for a couple of years, <a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> and <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> entered into a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02364542-2A1293132?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">binding agreement</a> on the 19 April 2021, under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy. The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets. This deal was discussed in <a href="https://skr.ma/W2guR" target="_blank" rel="noopener">Orocobre/Galaxy Resources: On A Charge</a>.
</div>
</li>
</ul>
Nickel miner <a href="https://www.smartkarma.com/entities/western-areas-ltd" target="_blank" data-smartkarma-citation="entities:15497:1" rel="noopener">Western Areas (WSA AU)</a> has now <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02408950-6A1046238?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">confirmed</a> media reports it is in preliminary discussions with IGO in relation to a change of control proposal. 
No price is mentioned, and due diligence has yet to be afforded.
More below the fold.

After a downturn in the price of the battery commodities and a reduction in tonnes exported, mining consolidations are back in vogue as miners take big bets on electric vehicles, as demand and prices increase for battery minerals.

February last year, Wesfarmers Ltd (WES AU) said it would proceed with the development of a new lithium mine and processing hub in WA. The Mt Holland lithium project is a JV with Soc Quimica Y Minera Chile-B (SQM/B CI). Wesfarmers expects to lay out ~$950mn developing the mine, concentrator, and refinery (in Kwinana). A final investment decision was announced in February this year. 
In December last year, IGO Ltd (IGO AU) formed a JV with China’s Tianqi Lithium Corporation  (002466 CH), paying $US1.4bn to acquire a 24.99% stake in the Greenbushes lithium mine in Western Australia. The mine produces ~2% of the world's spodumene concentrate from a hard rock lithium mine. The JV also includes a 49% stake in the downstream lithium hydroxide plant in Kwinana near Perth. The JV was formed after Tianqi faced an increasing debt obligation after the decline in lithium prices. Tianqi maintained a 26% stake in Greenbushes and a 51% stake in the hydroxide plant.

This was a large bet, transforming IGO into a battery mineral and renewable energy play, away from its copper and gold heritage.  The deal was funded by debt and an A$766mn equity raise including a $446mn fully underwritten placement at $4.60, and a $320mn 1-for-8.5 pro-rata entitlement offer. The offer price represented a 9.7% discount to IGO’s last traded price.
The transaction was completed on the 30 June. Around two months earlier, IGO sold its 30% stake in the Tropicana gold mine joint venture for A$903mn.
Separately, IGO withdrew its takeover offer to Panoramic Resources (PAN AU) in January last year, citing a breach of conditions.



Pilbara Minerals (PLS AU) acquired Altura Mining (AJM AU) late last year after the latter entered receivership in November.


After circling each other for a couple of years, Galaxy Resources (GXY AU) and Orocobre Ltd (ORE AU) entered into a binding agreement on the 19 April 2021, under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy. The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets. This deal was discussed in Orocobre/Galaxy Resources: On A Charge.



Nickel miner Western Areas (WSA AU) has now confirmed media reports it is in preliminary discussions with IGO in relation to a change of control proposal. 
No price is mentioned, and due diligence has yet to be afforded.
More below the fold. 

Sociedad Quimica y Minera de C (SQM/B CI)

Western Areas

IGO/Western Areas: Battery Mineral Grab