Lithium Power International (LPI) has parted with its Australian subsidiary, Western Lithium, to Albemarle for a tidy $30 million.
The cash for shares agreement is expected to wrap up on July 3, and will see Albemarle take ownership of the Greenbushes and Pilgangoora exploration projects owned by Western Lithium.
The Greenbushes and Pilgangoora projects are located adjacent to two of the world’s premier hard-rock lithium mines of the same name. Albemarle is a major shareholder (49 per cent) in the Greenbushes mine, along with Joint Venture partner Tianqi Lithium.
LPI indicated it intended to spin-off Western Lithium for a separate listing on the ASX, but was swayed by a generous cash offering from Albemarle as well as ‘subdued capital market conditions’. LPI’s board subsequently determined that the transaction would provide better value and less risk for shareholders.
“This agreement with Albemarle provides LPI with immediate value for our Western Lithium subsidiary company,” Lithium Power International chief executive officer, Cristobal Garcia-Huidobro, said.
“Despite the significant progress we had made towards an initial public offering of Western Lithium in the past months, this asset realisation will provide a significant uplift to the pre-money valuation of our Western Australia asset portfolio.”
Western Lithium is the latest for Albemarle in a series of expansions into the Australian lithium sphere. It comes just a month after the US company doubled its lithium hydroxide capacity at Kemerton.
The expansion will increase Kemerton’s production capacity by 50 kilo-tonnes per annum, doubling total production to 100 kilo-tonnes per annum, making Albemarle the largest producer of lithium in Australia.
Albemarle chief executive officer, Kent Masters, said Australia is essential to the global supply chain for energy storage.
“Our decision to expand was driven by our confidence in future demand and allows us to offer customers additional supply from Greenbushes, well known as one of the world’s best lithium mines.”