Australian miner Pilbara Minerals is acquiring peer Latin Resources in an all-share deal valued at AUD 559.9 million ($370.8m), the companies said Thursday.

Under the proposed transaction, Latin shareholders will receive 0.07 new Pilbara shares for each Latin share held. Based on Pilbara’s last closing price of AUD 2.85/share, the transaction implies a value of AUD 0.20 per Latin share – representing a 57% premium to Latin’s 10-day volume-weighted average price.

The deal will see Pilbara securing Latin Resources’ flagship Salinas lithium project in Minas Gerais state, Brazil, Kallanish notes.

Pilbara Minerals’ ceo Dale Henderson says the acquisition is “on-strategy” and came after an “extensive period” of assessment of global projects.

“It provides Pilbara Minerals with optionality to sequence new supply and diversify into new growth markets for lithium such as Europe and North America,” Henderson adds. “We expect the combination of the Latin Resources and Pilbara Minerals teams will unlock the significant value of the Salinas project over time, de-risking its development and timing the project delivery appropriately in lock-step with the lithium market’s growth.”

Last December, Latin Resources increased the mineral resource estimate (MRE) at Salinas by 56% to 70.3 million tonnes at 1.27% lithium oxide. According to an initial preliminary economic assessment, phase 1 production is expected to start in 2026, with phase 2 commencing in 2029.

“We have been doing all we can to weather the storm in lithium markets over the course of this year,” Chris Gale, managing director of Latin Resources, writes in a letter to shareholders. Although the company’s board is confident that Latin Resources could have continued to develop the project independently, “the reality is that the world has changed dramatically in the last twelve months and the challenges of raising the capital we need to develop Salinas have risen significantly.” 

Latin’s board has unanimously recommended the deal in the absence of a superior proposal. The transaction is subject to regulatory and court approvals, as well as Latin shareholders’ approval.

Following the announcements, Latin’s shares were trading 54% higher at AUD 0.185/share at the time of writing. However, Pilbara’s shares were down 3.86%, trading at AUD 2.74/share.