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Lithium Americas trumps CATL with $400 million offer to buy Millennial Lithium

Construction of Caucharí-Olaroz. Credit: Lithium Americas Corp.

Lithium Americas (TSX, NYSE: LAC) announced Monday it has submitted an unconditional offer to acquire all outstanding shares of Millennial Lithium (TSXV: ML) at C$4.70 each, payable in cash and LAC common shares, for total consideration of approximately $400 million.

Based on LAC’s closing price on Friday, this consideration would result in Millennial shareholders owning approximately 9.9% of Lithium Americas.

Shares of Millennial surged 27.1% by 12:20 p.m. in Toronto on news of the Lithium Americas bid, for a total market capitalization of C$458.7 million.

Millennial has two non-producing lithium brine assets in northern Argentina — Pastos Grandes and Cauchari East, with a combined 4.12 million tonnes of lithium carbonate equivalent (LCE) in measured and indicated resources.

Lithium Americas and partner Ganfeng Lithium are currently developing the Caucharí-Olaroz lithium project in Jujuy province, Argentina, which is expected to enter production in Q3 2022.

Caucharí-Olaroz, named after the two salars in northwest Argentina where the project is located, has an annual production capacity of 40,000 tonnes lithium carbonate equivalent (LCE) over a projected mine life of 40 years.

Development planning is now underway for the Stage 2 expansion, which is expected to add at least 20,000 tpa of production capacity to the Caucharí-Olaroz operation, beginning in 2025.

“In proximity to Caucharí-Olaroz, Millennial’s 100%-owned Pastos Grandes lithium brine project represents an attractive regional growth opportunity for Lithium Americas,” Jonathan Evans, CEO of Lithium Americas said in a news release.

“As we bring Caucharí-Olaroz into production over the next year and continue to advance our Stage 2 expansion planning, the addition of this highly complementary lithium brine resource further enhances our long-term growth strategy in Argentina and leverages our technical and development expertise.”

In late September, China’s Contemporary Amperex Technology Co. (CATL), the world’s leading EV battery manufacturer, was revealed as the leading bidder for Millennial, with an offer of C$3.85 per share for a total cash consideration of approximately C$377 million ($297m).

Now, with a superior offer presented by Lithium Americas, the Millennial board has unanimously determined that this constitutes a “superior proposal” in accordance with the terms of the arrangement agreement between Millennial and CATL, the company said.

As such, Millennial has notified CATL that the latter would have 10 business days to match the offer, should it choose to do so.

Lithium Americas will, subject to certain conditions, reimburse Millennial for the termination fee of $20 million payable to CATL, should the CATL agreement be terminated.