PERTH (miningweekly.com) – ASX-listed Mineral Resources (MinRes) on Monday confirmed it had entered into an implementation agreement with the administrators of Alita Resources to acquire the Bald Hill lithium mine, in Western Australia.
Alita, previously known as Alliance Minerals, went into administration in 2020 and the Bald Hill mine was placed on care and maintenance.
Alita is subject to a deed of company arrangement under which US-based Austroid Corporation proposed to acquire the Bald Hill mine. This transaction was blocked by the Foreign Investment Review Board (FIRB) in July 2023.
Notwithstanding the FIRB rejection, MinRes states that the Bald Hill mine operates under effective foreign control through a complex corporate structure.
It is reported that the lithium mine operates at a loss under these arrangements, with profits transferred overseas via an offtake agreement with a Hong Kong-registered entity, Yihe Cleantech Material Limited. It has been alleged that this offtake agreement has also led to an underpayment of state royalties.
The deed administrators have started an application in the Supreme Court of Western Australia seeking various orders, including for Alita to be placed into liquidation to allow for the implementation of the proposed MinRes acquisition.
Alita’s receivers and managers, who were appointed by secured creditor Austroid, however, argue that they remain in control of the Bald Hill mine, and have over the past months received in excess of ten approaches from interested parties looking to acquire the mine. As a contingency, the receivers in July started preparation for a potential sale process, should the deed of company arrangement with Austroid not be effectuated.
MinRes said in a statement on Monday that if the court orders the liquidator to be appointed, MinRes will pay out the secured debt and acquire Alita’s interest in the Bald Hill mine, which will provide a material return to Alita. The consideration that MinRes will pay under the transaction is subject to a number of factors, including an independent expert valuation.
MinRes expects to fund the potential transaction from existing resources and does not intend to raise equity.
The company said that the successful acquisition of the Bald Hill mine would ensure that the mine was being operated by an experienced Australian, ASX-listed lithium miner and any profits that were generated and taxes and royalties paid in Australia would be to the benefit of Australian taxpayers.
Furthermore, the company argued that should the Treasurer’s decision-making power under the Foreign Acquisitions and Takeovers Act (FATA) have been circumvented and there was a risk the mine remained in the effective control of foreign entities whose proposed acquisition has been rejected by FIRB, the Australian government should use its powers under FATA to intervene.