Tecpetrol Investments, a subsidiary of the Techint group, announced that it has presented a non-binding proposal for the acquisition of Alpha Lithium Corporation, a Canadian company listed on the Stock Exchange whose assets are all in Argentina. It owns the Tolillar lithium projects (Salta) and 5,000 hectares in the Salar del Hombre Muerto (Catamarca), one of the largest reserves of this mineral in the country.
The offer was made on May 15 and came later private negotiations failed. It was for US$178 million (C$241 million) in cash and, on Tuesday, it was rejected by Alpha Lithium, which would not consider it or enter into negotiations.
Techint’s proposal valued the Canadian company’s shares at C$1.24 per share, a 13% premium over the May 12 close. And the Argentine company has indicated it he was willing to improve the economic conditions of his offer if the mining company has agreed to give you access to its numbers to set a new, more appropriate price e a 30 day exclusive.
Despite the rejection, Tecpetrol said it was willing to immediately enter into good faith negotiations with Alpha, improve the offer and complete the transaction. The company has tried to portray itself as a Canadian investor (noting that it has operated there for 20 years with Tenaris) and has stated that its intention is to develop lithium assets as part of an integrated supply chain for batteries in West (as opposed to China) and stressed that the offer was in line with Canada’s strategy to increase the supply of critical minerals.
Tecpetrol is the oil arm of Techint and is looking to put together a strategy of energy transitiontowards more sustainable energy.
To convince Alpha Lithium shareholders, Techint highlighted its track record, but also stated that the Canadian company’s project “remains a challenge and You don’t have enough funds.” Mentions it for to develop the mining activities the shareholders will have to give up part of their holdings and that “given technical expertise is required development and execution risk“.
Techint also said financing of the purchase is unconditional, as the group has the resources to cancel the purchase in its entirety without resorting to outside help.
The list of “benefits” drawn up by the Argentine group was not enough to entice Alpha’s shareholders, who considered offer was “opportunistic and it is not in the best interests of Alpha or its shareholders.”
What does Techint want to buy?
Alpha Lithium – who said so in May he has $35 million in cash for your projects- is nearing completion of construction of a pilot plant of 120 tons per year at Tolillar and expects to start testing lithium carbonate production between the second and third quarters of this year.
This plant could use the brine that is extracted from Tolillar as well as from the Salar del Hombre Muerto.
The company currently has five rigs in operation and has already drilled 24 wells in the northern part of the project.
For its part, the 5,000-hectare exploration project in the Salar del Hombre Muerto (shared by Salta and Catamarca) is the main lithium deposit in operation in Argentina.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.