US lithium products giant Albemarle Corp (NYSE: ALB) has signed an exclusivity agreement with Mineral Resources (ASX: MIN) to buy 50% of the world-class Wodgina lithium project in Western Australia’s Pilbara region. Under the terms of the proposed deal, which the parties plan to convert to a binding agreement by December 14, Albemarle will pay MinRes $US1.15 billion ($1.6 billion) cash before the parties set up a 50:50 joint venture to complete construction of the 750,000tpa 6% lithium concentrate plant and fund and design an adjacent lithium hydroxide operation, capable of producing up to 100,000tpa. MinRes kicked off a sales process in May following myriad unsolicited expressions of interest in Wodgina, the world’s largest known hard-rock lithium resource.
Mineral Resources Limited (ASX: MIN, MRL) is pleased to announce that it has entered into an Exclusivity Agreement (Agreement) with Albemarle Corporation (NYSE: ALB, Albemarle) in relation to the potential sale of a 50% interest in the Wodgina Lithium Project (Sale Interest) and formation of a 50:50 joint venture that will produce spodumene concentrate and lithium hydroxide (Wodgina JV).
The execution of the Agreement follows a global sale process in relation to the Wodgina Lithium Project first announced by MRL in May 2018, which resulted in strong interest being received from a range of global participants in the battery minerals and chemicals value chain.
Key commercial terms
Under the Agreement, the parties agree to use their respective best endeavours to agree upon and execute binding transaction documents (Definitive Documents) embodying the following commercially agreed terms, by no later than 14 December 2018 (or such later period as the parties mutually agree):
Purchase price for the Sale Interest of US$1.15B in cash (based on a US$2.3B enterprise value for the Wodgina Lithium Project on a 100% basis) payable upon completion of the sale of the Sale Interest.
Other than conditions of an administrative nature, the only transaction-specific conditions to be satisfied for Completion to occur are the parties obtaining applicable regulatory approvals (which will include FIRB and any other approvals agreed between the parties as required) and any third party consents.
Albemarle to acquire a 50% interest in all mineral rights within the Wodgina tenements other than iron ore (which will be retained exclusively by MRL) and tantalum (which remain held by Global Advanced Metals Greenbushes Pty Ltd), all fixed infrastructure and utility assets, the spodumene concentrate plant and the mobile mining equipment.
The parties will jointly manage the Wodgina JV, through a company to be owned in equal shares by the parties.
Mineral Resources managing director Chris Ellison said:
“I am extremely pleased we have been able to reach agreement with Albemarle on the basis on which we will negotiate exclusively regarding a potential joint venture at Wodgina.
“It is very apparent to me that there is an extremely good fit between the corporate cultures and skill sets of our respective businesses.
“I am confident that with MRL and Albemarle working together at Wodgina, we will produce and supply high-quality, competitively priced lithium products into the market to meet increasing global requirements for these important energy storage products.
“I look forward to working constructively with Albemarle to promptly conclude negotiation and execution of binding documentation for the establishment and operation of the joint venture.”