Things are heating up in the lithium supply space as demand continues increasing, spurring M&A activity and raising the stock of small-cap early-stage lithium miners. Albemarle (NYSE:ALB), the world’s top lithium producer, submitted a new proposal to acquire Australian lithium start-up Liontown Resources for US$3.7 billion. Despite the offer representing a 64% premium to Liontown’s closing price, the company rejected the offer, driving its shares up over 70% and fueling anticipation of deeper consolidation. Major automakers including Tesla Inc. (NASDAQ:TSLA) and Ford Motor (NYSE:F) have supply agreements with Liontown, which controls two major lithium deposits, including the Kathleen Valley project, one of Australia’s most promising early-stage lithium resources with an estimated 156 million tonnes (Mt) of lithium oxide. Global lithium demand is projected to increase fivefold by 2030, creating a predicted supply deficit that could deliver stronger lithium prices for longer and providing a boost for lithium companies including Usha Resources Ltd. (TSXV:USHA) (OTCQB:USHAF) and Sigma Lithium (TSXV:SGML) (NASDAQ:SGML).
Usha Resources Ltd. (TSXV:USHA) (OTCQB:USHAF) is a mineral acquisition and exploration company based in North America that focuses on the development of drill-ready battery and precious metal properties. The company’s portfolio includes the Jackpot Lake lithium brine project in Nevada, the White Willow lithium-tantalum project in Ontario, the Nicobat nickel-copper-cobalt project in Ontario, and the Lost Basin gold-copper project in Arizona.
On March 30, Usha Resources provided a reminder to shareholders of the upcoming share distribution record date on April 12 for the planned spinout of Formation Metals Inc. (FMI). Upon the completion of the spinout and share exchange, every Usha shareholder will receive one common share of FMI for every five USHA shares held on the upcoming share distribution record date. FMI will hold interest in the Nicobat nickel project in Ontario, while Usha will retain and focus on its lithium exploration projects.
Two days earlier, Usha revealed that it has entered the hard-rock lithium space through the acquisition of the White Willow Lithium-Tantalum Property in Ontario. The 15,510-hectare project offers a unique and timely opportunity to capitalize on Canada’s rapidly expanding lithium metal and green energy markets and is located close to other lithium projects like the Separation Rapids Lithium Deposit, the Georgia Lake Pegmatite Field, and the Seymour Lake Lithium Project, where Green Technology Metals has identified a 9.9 Mt resource at 1.04% of lithium oxide (Li2O).
The White Willow property contains a fertile lithium-cesium-tantalum (LCT) system with two highly developed LCT-pegmatite dikes, with limited exploration work revealing samples as high as 0.5% Li2O and 14.64% tantalum oxide (Ta2O5) in and around the dikes.
Minimal surface sampling also revealed very unusual lithium concentrations, with several samples testing at or above 0.40% Li2O. The property also has very anomalous tantalum and cesium, with two samples indicating 3.41% and 3.78% Ta2O5. The presence of high-grade tantalite suggests the presence of higher-grade lithium in nearby zones of the property’s LCT-system.
“The rising global demand for lithium, driven by the green energy revolution and the exponential growth of electric vehicles, makes the acquisition of the White Willow Lithium-Tantalum Property an attractive investment. This acquisition promises to position the Company at the forefront of the burgeoning lithium market, offering significant growth opportunities,” said Deepak Varshney, CEO of Usha Resources. “The geological characteristics of the property and the historical data on mineral occurrences make it an exceptional opportunity for exploration and potential development. By making these strategic acquisitions, we are positioning Usha at the forefront of the evolving lithium market, thereby securing a foothold in the rapidly expanding green energy sector.”
The White Willow purchase is complementary to Usha Resources’ 100%-owned flagship Jackpot Lake Lithium Brine Project in Nevada, where it has just tripled its land position and is starting its first drill program to establish a 43-101 resource.
The exploration team has discovered a high-porosity zone of sand followed by conglomerate beginning at 1,533 feet, according to a recent update from the company on its work at the Jackpot Lake Lithium Brine Property. The second hole (JP22-2) of the drill program has reached 1,755 feet.
Potential Mergers and Acquisitions in the Lithium Space
Albemarle Corporation (NYSE:ALB) notes Liontown Resources announcement to the ASX on March 28, 2023, and confirms that it submitted a non-binding proposal to acquire all outstanding shares of Liontown by scheme of arrangement for A$2.50 or US$1.661 per share in cash, valued at A$5.2 or US$3.4 billion on an enterprise basis. Albemarle believes that the proposal represents an attractive opportunity for Liontown shareholders, with the per share consideration reflecting a significant premium to Liontown shareholders and a large premium over comparable benchmarks. Albemarle has built a less than 5% holding in Liontown stock as of March 27, 2023, to demonstrate its commitment to the acquisition.
Tesla Inc. (NASDAQ:TSLA) has expressed interest in acquiring battery metals miner Sigma Lithium Corp., citing high demand for the metal used in electric vehicle (EV) batteries. Elon Musk’s company has reportedly been consulting with possible advisers about a bid. According to one of the sources, Sigma Lithium is one of several mining options Tesla is considering while it considers its own refining. In aftermarket trade on February 17, Sigma’s US shares increased by more than 25%. Sigma’s main shareholder has been considering a possible sale and evaluating potential buyers’ interest, including mining companies and automakers.
Ford Motor Co (NYSE:F) plans to build a $3.5 billion factory in Marshall, Michigan, set to open in 2026. The factory will produce 35 gigawatt-hours of lithium iron phosphate (LFP) cells annually for EVs. The move comes after the carmaker announced that LFP batteries would be used in the Mustang Mach-E starting in mid-2023 and the F-150 Lightning starting in early 2024. The batteries, however, will be acquired from CATL in China, the world’s biggest cell manufacturer and one of the world’s leaders in LFP production. Ford will license CATL technology but will own and run the new factory rather than forming a joint venture.
Sigma Lithium (TSXV:SGML) (NASDAQ:SGML) announced in February the completion of commissioning of its Greentech Plant crushing circuit and the production of continuous sequential batches of crushed lithium material, both on time and in accordance with previously provided guidance on December 20, 2022 and January 23, 2023. In addition, the Company announced the beginning of detailed engineering and capital expenditure costing for the Greentech Plant expansion (Phase 2 & 3) at FEL-3 precision by obtaining firm estimates from suppliers. The Greentech Plant expansion will increase the run-rate output of Battery Grade Sustainable Lithium from 270,000 to 766,000 tpa.
Usha Resources recently closed a non-brokered private placement of 9,230,769 units at $0.325 per unit for total gross proceeds of $3 million.
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