Galan Lithium Addresses EnergyX's Offer for Argentina Assets

Galan Lithium (ASX:GLN,OTC Pink:GLNLF) has responded to a media report that it has received a takeover bid.

The company said on Tuesday (August 6) that Energy Exploration Technologies (EnergyX) has made "an unsolicited, confidential, conditional, non-binding indicative proposal" for its Argentina lithium assets.

EnergyX has proposed to pay US$50 million in cash for the assets, along with common shares that EnergyX values at US$50 million. Galan notes that EnergyX does not trade on any stock exchange.

The proposal also includes US$50 million for a subsidiary of EnergyX that would own Galan's assets. In addition, EnergyX is offering a 10 percent gross revenue royalty to Galan for 10 years upon the start of commercial production.

EnergyX confirmed its offer to Galan via its own Tuesday press release.

“There’s no doubt in my mind that lithium demand will continue to grow later this decade,” Reuters quotes Teague Egan, CEO of EnergyX, as saying. He added that EnergyX is looking to consolidate acreage while lithium prices are low.

Major lithium producers like Albemarle (NYSE:ALB) have been forced to cut costs in today's difficult market environment — the company said at the end of July that prices for the important battery metal have fallen from an average of US$20 per kilogram at the end of last year to a current range of roughly US$12 to US$15.

Currently, Galan is “still seeking to negotiate a confidentiality agreement” with EnergyX regarding its proposal.

The company emphasised that there is no certainty that a transaction will proceed, and that due diligence activities and shareholder approval will be necessary should any agreement be entered into.

Shareholders will be kept informed following the company’s continuous disclosure obligations.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Galan Lithium is a client of the Investing News Network. This article is not paid-for content.