Mineral Resources boosts stake in lithium miner Azure Minerals

The battle to control Australia’s Azure Minerals (ASX: AZS) seems far from over as Mineral Resources (ASX: MIN) bought additional shares on Tuesday in the lithium and battery metals junior, raising its stake to 13.5% from the 12.2% stake it racked up in early November.

Azure, which is developing the Andover lithium and nickel-copper-cobalt project in Western Australia’s Pilbara region, has been attracting names in Australia’s mining sector ever since Chilean lithium giant SQM (NYSE: SQM) offered to buy the junior for A$1.6 billion ($1.4 billion). 

SQM’s bid, though accepted by Azure, triggered a buying frenzy. First, it was Australia’s richest woman Gina Rinehart, who stepped in through her mining company Hancock Prospecting, securing a 18% stake in Azure.

She was followed by Mineral Resources, which had already been boosting its stake in Azure since mid-October.

Together, Hancock Prospecting and Mineral Resources have enough votes to prevent SQM’s scheme of arrangement vote getting up, given it requires three-quarters of shareholders to vote in favour of the transaction.

SQM’s deal, in the works since the Chilean miner acquired in March a 19.9% stake in Azure for A$20 million, has two layers. 

One involves SQM consolidating a 100% ownership of Azure for A$3.52 per share, a premium of 44.3% to the stock’s last close of A$2.44 on Friday.

The other is SQM’s off-market takeover bid of A$3.50 per share, in case the scheme of arrangement announced is not accepted. This option now seems the only way for the takeover to move forward.

Perth-headquartered Mineral Resources has been targeting other lithium miners as well, including Wildcat Resources (ASX: WC8), in which it now holds a 19.8% stake.

Other MinRes’ investments in Western Australian explorers include deals with Delta Lithium (ASX: DLI), Global Lithium Resources (ASX: GL1) and Essential Metals (ASX: ESS).

A decline in valuations for some lithium producers is making them prime targets for investors trying to find entry points into the clean energy transition and the electric vehicle supply chain trade. 

Shares in Azure jumped on Tuesday after MinRes’ move, peaking to a fresh high of A$4.37, before retreating to around $4.04 by close. The marginal increase of 1.3% from Monday’s closing price of $3.99 left Azure with a market capitalization of A$1.8 billion ($1.3 billion).