Talison, Salares Lithium to merge

VANCOUVER — Australian producer Talison Minerals and Vancouver- based Salares Lithium (LIT-V) are joining forces to create the world’s largest publicly traded lithium production and exploration company.

Talison is already the largest lithium producer in the world, based on its hard-rock mine in the Greenbushes area of Western Australia. Lithium mining at Greenbushes dates to 1983; the processing plant was built in 1985 and has been expanded several times since, to now produce roughly 260,000 tonnes of lithium concentrate annually.

That production level has enabled Talison to position itself as one of the largest suppliers of lithium in the key Chinese lithium market. Now the Perth-based company is taking over Salares Lithium and listing on the Venture Exchange.

Salares is a lithium explorer with a large, prospective brine project portfolio focused exclusively on Chile, which produces more lithium than any other country. Salares’ 400-sq.-km land package in northern Chile’s Atacama Desert is home to five salares, or brine lakes, and the company’s recent geophysical work has increased its confidence that those lakes host a significant lithium resource.

The proposed merger would see Talison handing over 2.81 shares for each Salares share, resulting in a new company owned 80% by Talison current shareholders and 20% by current Salares shareholders.

The offer values a Salares share at $1.25, a 98% premium based on the company’s 20-day volume-weighted average share price. The merged entity will be known as Talison Lithium and will have offices in Perth and Vancouver.

As Salares and Talison work through the merger requirements, including obtaining approval from Salares shareholders, Salares is undertaking a $40-million private placement of subscription receipts. Talison’s major shareholder, Resource Capital Fund, has fully subscribed for the private placement but will scale back its commitment to allow other investors to participate.

The $40 million raised in the placement will be used to finance the growth strategies of the merged group, including another expansion of the Greenbushes mine, a new round of exploration around the operating mine aimed at upgrading and increasing resources, further feasibility studies into developing a lithium carbonate plant to further process concentrates from the mine, and acceleration of the exploration work at Salares’ projects in Chile.

Lithium applications fall within two broad categories: technical and chemical.

Technical applications include glass and ceramics as well as mould fluxes for steel casings, and these uses require low iron con-cent rates. Chemical applications include batteries, lubricants, aluminum smelting and pharmaceuticals.

Salares remained halted for several days after the merger news, keeping its share price at 62¢. The company has a 52-week trading range of 46¢-$1.22 and 36 million shares outstanding.