Galan rejects $240M takeover offer at 2.6 times | Australian Markets

Galan Lithium has turned down a US$150 million (A$240M) money offer from China’s Zhejiang Huayou Cobalt Co and France’s Renault Group to amass its Hombre Muerto West and Candelas lithium brine tasks in Argentina, labelling the proposal “opportunistic” and “undervalued”.

The market responded swiftly, with Galan’s shares hovering more than 50 per cent to a high of 16 cents per share, from a market cap of $92 million the day previous to a high of $134 million intraday – a stage effectively short of the proposed $240 million money takeover.

The surge defied the broader market downturn, with the ASX benchmark index slipping about 1 per cent prompted by United States President Donald Trump’s retaliatory tariff bulletins in a single day.

The unsolicited, conditional and non-binding proposal from battery supplies giant Zhejiang Huayou and EV producer Renault focused Galan’s Argentine lithium belongings in a world-class Lithium Triangle.

Conditions included due diligence, binding agreements and approvals from shareholders, regulators and the bidders’ boards.

Galan and its advisors rejected the offer, citing a perception that its flagship Hombre Muerto West project promised a superior final result for shareholders within the long time period. The project is nearing manufacturing of 5,400 tonnes each year (tpa) of lithium carbonate equal.

Management is finalising offtake and financing offers for Hombre Muerto West’s section one development, which the company says ought to be accomplished by the top of the 12 months.

Galan is continuous discussions with companions together with Chengdu Chemphys, which supplied a potential US$40M (A$64.15M) funding and offtake bundle final August.

Galan positioned US$3M (A$4.81M) in shares to a Chengdu Chemphys affiliate, Latam Resources, in January as a half of the August settlement.

The company additionally issued a secondary trading discover as we speak, which confirmed the issuance of 5.7M shares final Friday, as half of an at-the-market subscription deed to ASX-listed Acuity Capital.

Galan’s Hombre Muerto West and Candelas tasks have a 9.5-million-tonne lithium carbonate equal (LCE) useful resource at a high-grade 841 milligrams per litre (mg/L) and is steadily advancing to section 1 manufacturing, now effectively previous half-way completion.

The project lies simply 100km south of Rio Tinto’s Rincon project, additionally within Argentina’s outstanding Lithium Triangle. Rincon’s non-JORC 5.8-million tonne LCE useful resource was acquired by the mining giant in 2022 for a little over $1 billion, during a time of more buoyant lithium costs. Importantly, Galan’s Hombre Muerto salar options lithium grades double that of the Rincon project’s grade, which is available in at round 420mg/L.

Galan equally rejected a bid for Hombre Muerto West and Candelas final August by declining a US$150M bid from EnergyX, a lithium technology startup backed by Lithium Triangle neighbours Posco Holdings.

Despite lithium carbonate costs languishing, the recurring curiosity from industry heavyweights highlights the tasks’ standing as prized belongings within the lithium triangle, significantly as demand for high-grade, low-impurity brine grows with the shift to lithium ferrophosphate batteries in China and past.

The US$150M offer additionally highlights Galan’s low-cost profile. The company pegged its section one manufacturing prices at US$3500/t lithium carbonate equal in its 2023 definitive feasibility examine – reiterating its case for holding out on an asset sale.

Galan’s choice and the following share price rally may signal a turning level for the company. With section one manufacturing on the horizon and a strong useful resource base, it seems poised to capitalise on its belongings ought to a money injection from a partnership or capital raising push it over the manufacturing ending line.

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