Alliance Mineral Assets secures strategic investment from Galaxy and Jiangxi

Alliance Mineral Assets (A40:ASX), which operates the Bald Hill open pit spodumene mine, located in Coolgardie, Western Australia, has received A$32.5m in a subscription agreement with Galaxy Resources (GXY:AXY), which operates the Mt Cattlin spodumene mine, located in Ravensthorpe, Western Australia and Jiangxi Special Electric Motor Co., which operates the Yichun lepidolite mine, located in Jiangxi Province, China.

Alliance plans to use the funds to fund the capital expenditure required for continued upgrades to the processing facilities at the Bald Hill Plant and future exploration and other initiatives at the Project, as well as, general working capital requirements.

This is latest of a series of deals and offers in the lithium space which include: POSCO’s (PKX:NYSE) US$280m acquisition of Galaxy’s northern Hombre Muerto project (100%), located in Argentina (announced 01 March 2019); Pluspetrol’s (private) C$111m acquisition (announced 15 March 2019) of LSC Lithium (LSC.TSX), which owned the Pozuelos-Pastos Grandes (100%) and Rio Grande (100%) lithium brine projects, located in Argentina; and Wesfarmers A$776m bid (announced 01 May 2019) for Kidman Resources (KDR.ASX), which owns a 50% interest in the Mt Holland spodumene project, located in Yilgarn Shire, Western Australia.

There has been significant variation in the transaction value per tonne of lithium carbonate equivalent (LCE) with the POSCO deal completed at US$110/t LCE, while the Pluspetrol deal was at US$14.68/t LSC and the Wesfarmers bid at US$159/t LCE.

This flurry of activity in the lithium space demonstrates that strategic investors continue to have significant interest in the lithium space despite the market’s negative sentiment to lithium companies at present.