SINGAPORE (Apr 5): Alliance Mineral Assets and ASX-listed Tawana Resources have announced plans for a merger via a court-approved scheme of arrangement.
Under the scheme of arrangement, Tawana shareholders will receive 1.1 new Alliance shares for every one Tawana share held.
The consideration for each Tawana share is 37.4 cents, based on the closing share price of 34 cents for Alliance shares on the last trading day.
On completion of the deal, Tawana will become a wholly-owned subsidiary of Alliance, with existing Alliance and Tawana shareholders owning 51% and 49% of the merged entity.
The merged entity will have a market capitalisation of approximately A$446 million ($450.8 million), making it a mid-tier producer of lithium concentrate.
The transaction, subject to the necessary shareholder approval, is expected to be completed by 4Q18.
The planned merger follows the sacking of Tjandra Pramoko, CEO of Alliance, and his wife, executive director Simone Suen, by the company’s board, last month.
In its regulatory filing, Alliance's board explained that the company's other substantial shareholders and key business partners had no longer wanted to deal with the company as long as Pramoko remained as CEO.
Alliance and a wholly-owned subsidiary of Tawana have been working together via a lithium rights joint venture agreement since 2017 for the development, mining and production of the mineral resources on the Bald Hill Project in Western Australia.
The merged group will benefit from greater efficiencies and productivity arising from a simplified ownership and management structure, and the proven management and operational expertise of Alliance and Tawana.
In conjunction with the merger, Alliance and Tawana have also announced plans to raise equity funds for working capital for the new entity.
Alliance plans to conduct a fully underwritten placement to institutional investors to raise gross proceeds of A$25 million and a non-underwritten placement to Burwill Holdings, an existing substantial shareholder of Alliance, which is conditional on Alliance shareholders’ approval, to raise additional gross proceeds of A$7.8 million.
Alliance says the placements are to provide additional working capital and provide funding for future exploration and other initiatives at the Bald Hill Project.
Meanwhile, Tawana plans to raise A$20 million from professional and sophisticated investors, and reserves the right to place up to a further A$5 million to sophisticated and institutional investors on a non-underwritten basis.