TNR Gold Corp. [TNR-TSXV] has rejected a non-binding all-cash takeover offer from Lithium Royalty Corp. [LIRC-TSX] worth $15 million, or $0.08 per share.
“Given the offer represents such a small premium to the closing price of $0.725 on September 29, 2023, the board believes the offer is an opportunistic, “low-ball” offer that is financially inadequate and not in the best interests of TNR or its shareholders,’’ TNR said in a press release.
Lithium Royalty Corp. (LRC) is a lithium-focused royalty company with a globally diversified portfolio of 32 revenue royalties on mineral properties around the world.
On September 29, 2023, LRC shares closed at $10.86 and currently trade in a 52-week range of $17 and $10.12.
Back in February, 2023, TNR monetized its royalty holding on the Mariana lithium-potash brine project in Argentina via a partial sale to an Ontario limited partnership affiliated with LRC.
Under an agreement, LRC bought a 0.5% NSR royalty on the asset for US$9.0 million, including an 0.05% NSR royalty sold by TNR on behalf of its shareholders. Following the sale to LRC, TNR continued hold a 1.5% NSR royalty, including a 0.15% NSR held on behalf of shareholders.
Mariana is located in the renowned South American Lithium Belt and is being developed by Ganfeng Lithium. The 160-square-kilometre Mariana project strategically encompasses an entire mineral-rich evaporate basin that ranks as one of the more prospective salars, or salt lakes, in the region.
There is no ready market for lithium. Lithium prices are determined by the purity and chemistry of the material as well as the length of the contract between buyer and seller.
Brines (in salt ponds) and spodumene (hard rock) represent the two main sources of commercial lithium production.
In addition to the Mariana Lithium royalty, TNR holds a 0.36% NSR royalty on the Los Azules copper project which is being developed by McEwen Mining Inc. [MUX-TSX, NYSE]. It also holds a 7.0% net profits royalty holding on the Batidero 1 and 11 properties of the Josemaria project that is being developed by Lundin Mining Corp. [LUN-TSX; LUMI-Sweden].
“Given that the LRC valued only a portion of the company at US$9.0 million, based on its purchase in February 2023 of the 0.5% NSR involving the Mariana Lithium project in Argentina for US$9.0 million, the offering of $15 million (approximately US$11 million) for the entire company is considered opportunistic inadequate,’’ said TNR CEO and Executive Chairman Kirill Klip.
After dropping 6.7% to $0.07 on September 29, 2023, TNR shares are currently trading in a 52-week range of $0.075 and $0.03.
