Pilbara Minerals to acquire Latin Resources for $369 million

Australian lithium miner Pilbara Minerals said on Thursday it would acquire smaller peer Latin Resources for an implied value of A$559.9 million ($369.4 million) in a move to diversify its operations.

Latin Resources shareholders will receive 0.07 new Pilbara shares for each share held, under the all-share deal.

Based on Pilbara’s last closing price, the deal implies a value of A$0.20 per Latin Resources share, a 66.7% premium to its last closing level.

On Thursday, after the deal was announced, shares of Latin Resources soared 56% in their biggest one-day percentage gain since April 2022.

The transaction will give Pilbara control of Latin Resource’s flagship Salinas lithium project in Minas Gerais, Brazil, and exposure to the growing North American and European battery market.

“While Minas Gerais is a mining friendly jurisdiction, the challenge will be convincing the market that diversifying into Brazil makes sense with a less-than-stellar track record from ASX miners,” analysts at Citi wrote.

Analysts at RBC Capital Markets also said they see “limited operational synergies”, with the deal being a drag on Pilbara’s earnings in the near term.

Pilbara’s shares fell as much as 6.7% on Thursday to their lowest level since August 2022.

Latin Resources board unanimously recommended the deal in the absence of a better proposal.

($1 = 1.5158 Australian dollars)

(By Sneha Kumar; Editing by Mohammed Safi Shamsi, Rashmi Aich and Tom Hogue)