Pilbara Minerals to Acquire Latin Resources, Expanding Lithium Portfolio to Brazil

Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) shared on August 15 that it plans to acquire Latin Resources (ASX:LRS,OTC Pink:LRSRF) through a a binding scheme implementation agreement.

The deal will give Pilbara Minerals ownership of Latin Resources' flagship Salinas lithium project.

It implies a value of AU$0.20 per Latin Resources share based on Pilbara Minerals' August 14 closing level of AU$2.85. That represents a 32 percent premium to Latin Resources' 30 day volume-weighed average price of AU$0.151 per share.

In total, Pilbara Minerals' purchase is valued at about AU$560 million.

"This acquisition is on-strategy, diversifying the business with what we believe is a counter-cyclical, accretive extension that further builds out Pilbara Minerals' position as one of the leading lithium materials suppliers globally,” Dale Henderson, managing director and CEO of Pilbara Minerals, said in a press release.

He added that Salinas, which is located in Minas Gerais, Brazil, will complement Pilbara Minerals' Western Australia-based Pilgangoora operation, which is of the world’s largest independent hard-rock lithium operations.

Meanwhile, Latin Resources shareholders will get exposure to Pilgangoora, which is already in production, and will gain greater security as Pilbara Minerals helps to de-risk funding and development at Salinas.

“I have spent time at Pilbara Minerals' Pilgangoora mine, met with the Pilbara Minerals team and I'm in no doubt that Pilbara Minerals' expertise in lithium mining will be an enormous benefit not only to Latin Resources and its 100%-owned Brazilian subsidiary, Belo Lithium, but to Brazil itself,” said Chris Gale, managing director of Latin Resources.

Salinas is located in Minas Gerais' Bananal Valley area, 10 kilometres outside the town of Salinas. The project's resource estimate, which covers the Colina and Fog's Block deposits, stands at 77.7 million tonnes at 1.24 percent lithium oxide.

According to the company, Salinas is neighboured by lithium producer Sigma Lithium (TSXV:SGML,NASDAQ:SGML).

Latin Resources plans to hold a meeting for shareholders to vote on the acquisition plan in mid-November. If approved, it is expected to close in late November or early December.

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