China’s largest electric vehicle (EV) battery maker is set to buy an 8.5 per cent stake in Australian lithium miner Pilbara Minerals for AU$55 million.
The placement will take place in two parts: an initial AU$36.5 million unconditional and underwritten placement to eligible institutional and sophisticated investors and a AU$55.0 million conditional strategic placement to Contemporary Amperex Technology (CATL).
Under the deal, CATL will buy 183.3 million shares at a fixed price of AU$0.30 each — a 14.3 per cent discount to Pilbara Minerals’ last traded price on 28 August 2019 on the Australian Stock Exchange.
“The strategic relationship combines Pilbara Minerals’ expertise in mining, development and upstream spodumene production with CATL’s expertise in downstream processing and its strong customer relationships with electric vehicle manufacturers,” Pilbara Minerals Managing Director Ken Brinsden said.
“While there has been commentary talking down the current state of lithium markets, it has belied the significant interest we have continued to see from the strategic players in the lithium-ion supply chain and their focus on lithium raw material supply. In particular, the focus is on the quality and security of the lithium raw material supply and matching the raw material demand growth to growth downstream in the lithium-ion battery supply chain,” commented Mr Brinsden.
“These factors have continued to influence our thoughts on the Company’s future growth and funding mechanisms. We welcome CATL as a new investor in Pilbara Minerals and we are pleased with their support of our fundraising initiative. We also look forward to introducing further institutional investors to our share register alongside our supportive retail shareholder base.”
CATL, which has three battery manufacturing facilities in China, and has relationships with EV makers including Toyota, BMW, Volkswagen and Honda.
As part of the relationship, CATL has indicated its willingness to provide commercial support to the Company by purchasing Pilbara Minerals’ spodumene concentrate product which may become available under its existing offtake agreement or otherwise, subject to mutual commercial agreement and parties entering into an offtake agreement. Further, the parties have recognised as part of this relationship that the Company can benefit from CATL’s technical and strategic expertise and financial capacity and broaden the Company’s exposure to a wider range of investors, financiers and other commercial partners. CATL may also be able to assist with feasibility studies and the future development of its projects.
The strategic investment from CATL is part of Pilbara Minerals’ fundraising efforts to further develop its Pilgangoora lithium-tantalum project in Western Australia. The company is looking to raise a total of AU$91.5 million.
Additionally, the lithium miner said a share purchase plan, which will be offered to eligible shareholders, could potentially increase the raising by AU$20 million for a total of AU$111.5 million.
Last week, Pilbara Minerals decided to close a partnering process for Pilgangoora as, according to the company, the offers received for a stake in the project did not represent an appropriate valuation for the asset. The company also cut its sales guidance for the September 2019 quarter.