Australian Vanadium (AVL) has signed a scheme implementation deed to acquire and subsequently merge with Technology Metals Australia (TMT) for A$217m ($139m), implying an offer price of A$0.324 per TMT share.
Under the proposed scheme of the arrangement, AVL will buy all of the TMT shares on issue, with TMT shareholders owning 12 of AVL’s shares for each share held.
This offer marks a 9.8% premium to TMT’s last stock close and a 26.7% premium to the stock’s 30-day volume-weighted average price.
The TMT board has unanimously recommended that shareholders vote for the scheme in case no superior offer is put forth.
The proposal is currently pending shareholder and court clearances and an independent expert conceding that the scheme is in TMT shareholders’ “best interests”.
Furthermore, it is subject to AVL garnering at least A$15m through a placement to fund project integration, corporate efforts, general working capital and transaction costs.
If the scheme is approved, existing AVL shareholders will own nearly 58% of the merged entity while the remaining 42% will be held by TMT shareholders.
The combined company will consolidate two adjoining projects across one orebody, with the merged business to trade as Australian Vanadium on the ASX.
The merger will create a vanadium developer focused exclusively on Western Australia and create a combined mineral resource base with 25 years of mine life, with an opportunity for further extension of the mine. It brings an opportunity for future production of vanadium flow batteries in the country.
It will help consolidate processes such as permitting, offtake and project financing, and improve funding capability and bargaining power in terms of infrastructure, equipment, labour, and offtakers as well.
AVL CEO Graham Arvidson said: “The combination of Australian Vanadium and Technology Metals Australia is transformational for both companies and marks a significant milestone in both management teams’ efforts to develop their respective projects.
“The logical consolidation of two adjoining projects on the same orebody will unlock material synergies for both sets of shareholders. If successful, the transaction will create the leading ASX-listed vanadium developer and a world-class asset of scale located in a Tier-1 mining jurisdiction.”
TMT managing director Ian Prentice said: “We are excited to be proposing the consolidation of the Gabanintha vanadium orebody, arguably one of the best undeveloped vanadium resources in the world, to create the leading vanadium development company and enabling our dedicated shareholder base to maintain material exposure to what we believe will be the world’s next primary vanadium producer.”
