Mineral Resources (MinRes) will not proceed with its acquisition of Poseidon Nickel’s Lake Johnston nickel concentrator and tenures in Western Australia.
Poseidon announced it had received a notice of termination from MinRes on May 8 regarding the binding heads of agreement both companies entered on March 15.
The agreement announced in March would have seen MinRes acquire the Lake Johnston tenure outright, including all mineral rights, in order to convert the Lake Johnston nickel concentrator into a lithium hub.
“The company is considering the notice and will provide further updates as necessary,” Poseidon said.
If the deal moved forward, MinRes would have paid Poseidon $1 million on execution of the binding heads of agreement, $6.5 million on completion of the sale and purchase agreement and $7.5 million a year after completion of the transaction.
Prior to submitting its notice of termination, MinRes had proposed an alternative deal structure. However, Poseidon deemed it unsuitable.
“The alternative deal structure presented by Mineral Resources did not represent a compelling value proposition for Poseidon’s shareholders at this time,” Poseidon chief executive officer Brendan Shalders said last week.
“Poseidon is remain(ing) hopeful that MRL will either complete the original deal as documented in the binding heads of agreement or that Poseidon and MRL negotiate a new deal structure which reflects the value we see in the Lake Johnston project.”
Located approximately 185km southwest of Kalgoorlie, the Lake Johnston tenure covers 86km2 with one exploration license and 10 mining leases.
The Lake Johnston nickel concentrator plant has a 1.5-million-tonne-per-year capacity and is capable of being converted to treat lithium ores, including dense media separation fines.
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