Australian Vanadium Ltd (ASX:AVL, OTCQB:ATVVF) and Technology Metals Australia Ltd (ASX:TMT) have struck a deal to merge, in an agreement valued at $217 million which will see AVL acquire 100% of the TMT shares on issue.
The companies see the merger as a logical consolidation of two adjoining projects across the Gabanintha orebody.
As a result, the merged entity will become the leading Australian vanadium developer with a world-class asset of scale in Western Australia, a tier-one mining jurisdiction.
Global vanadium leader emerges
What’s more, the creation of a single integrated project will deliver operational and corporate synergies.
TMT managing director Ian Prentice said: “We are excited to be proposing the consolidation of the Gabanintha vanadium orebody, arguably one of the best undeveloped vanadium resources in the world, to create the leading vanadium development company and enabling our dedicated shareholder base to maintain material exposure to what we believe will be the world’s next primary vanadium producer.
“This all comes at a pivotal time for the global vanadium industry as vanadium flow batteries are established as a critical player in the long-duration energy storage market, a key requirement for the world’s transition to net zero and a cleaner future.
“We very much appreciate our major shareholder RCF’s demonstrable support for the vanadium thematic and the development of this world-class asset.”
Transformational for both companies
AVL CEO Graham Arvidson said: “The combination of Australian Vanadium and Technology Metals Australia is transformational for both companies and marks a significant milestone in both management teams’ efforts to develop their respective projects.
“The logical consolidation of two adjoining projects on the same orebody will unlock material synergies for both sets of shareholders.
“AVL’s institutional placement ensures that the combined group will be well-funded to progress integration and the go-forward development strategy.
“It is our opinion that RCF’s strong support for the placement highlights their long-term backing of the combined business as well as a broader view on the strengthening vanadium thematic.
“The transaction will leverage the best of both organisations, including best-in-class technical work, assets and people, and will result in AVL becoming the leading force in the Australian vanadium sector.”
Offer details
TMT shareholders will receive 12 AVL shares for every TMT share held on the scheme record date. This implies an offer price of A$0.324 per TMT share based on AVL’s last close price of A$0.027.
- The offer represents a premium of:
- 9.8% to TMT’s last close price, based on AVL and TMT’s last closing prices of A$0.027 per share and A$0.295 per share respectively; and
- 26.7% to TMT’s 30-day volume-weighted average price (VWAP), based on AVL’s 30-day VWAP of A$0.029.
In the absence of an independently determined superior proposal, TMT’s largest shareholder, RCF, has confirmed its intention to vote its 18% shareholding in TMT in favour of the scheme.
The AVL board is to be complemented with the addition of Jo Gaines as a non-executive director, while Ian Prentice will join AVL’s executive management team and will be initially focused on the integration of the two adjoining projects.
RCF capital support
AVL will conduct an institutional placement to raise A$15 million to fund ongoing project and corporate initiatives during the transaction period.
Shareholder Resource Capital Fund VII LP (RCF) has committed to subscribe for A$15 million of the placement with allocations subject to the outcome of the bookbuild process.
If the scheme is approved and implemented, existing AVL shareholders will hold some 58% of the combined group and existing TMT shareholders will hold around 42% of the combined group, which will continue to trade as Australian Vanadium Limited on the ASX.