CNGR moves into lithium with Solaroz project bid

May. 16, 2024

Exploring DLE

Lithium Energy announced it has executed a share purchase agreement with CNGR for the sale of Solaroz S.A., a wholly owned subsidiary with a 90% interest in the Solaroz project, located in Jujuy, Argentina. The total cash consideration is $63M, a roughly 70% premium to recent trading levels seen for the ASX listed company.

The sale is subject to several conditions, including shareholder approval. The board is considering distributing the cash consideration and/or organic opportunities in the battery minerals sector.

Solaroz is on the northern flanks of the Olaroz salar, where Arcadium’s Olaroz facility lies. The project’s MRE stands at 3.3 Mt LCE grading 305 mg/L Li, with a 1.3 Mt LCE high-grade core grading 400 mg/L Li. A 2023 PEA contemplated both 20 ktpa and 40 ktpa LCE evaporation pond operations, estimated at $705M and $1.28B CAPEX, respectively (including 30% contingency).

The company was also exploring DLE using technology provider Xi’An Lanshen New Material Technology, who had agreed to fund and build a 3 ktpa LCE pilot plant at Solaroz.

Adamas Take:

CNGR is the world’s largest producer of precursor cathode active materials. The company promotes a vertical integration strategy, which to date has involved the operation of multiple nickel laterite refineries in Indonesia and a growing battery recycling business.

Based on our records, however, this is its first investment upstream into lithium extraction (beyond recycled lithium), which could signal the company’s intention to take their pCAM business downstream into CAM.

In our view, if the transaction is approved, it is now more likely that the Solaroz project will be put into production, given the balance sheet support and strategic interests from CNGR. If the move into nickel is any guide, its development could occur at a disruptive pace.

The project is already off to a good start when considering the very low valuation relative to pro-cyclical Argentinian M&A deals from the 2021/2022 era.

[Extract from the May issue of the EV Battery Lithium Monthly service.]

 


 

Chris Williams, Analyst at Adamas Intelligence

Chris is an Analyst at Adamas Intelligence focused on the global lithium industry. He researches and analyzes the lithium value chain to uncover actionable opportunities for clients.

Chris has 11-years experience in mining and oil & gas operations optimization, delivering value from data intensive insight generation. He completed his Bachelor and Masters of Engineering at the University of Queensland, majoring in Mechanical Engineering, and is currently completing a Masters of Business Administration at the University of British Columbia.

 


 

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