Australia miners merge, hope to boost lithium sales
By James Regan
SYDNEY May 30 (Reuters) - Galaxy Resources and General Mining on Monday agreed to a A$216 million ($155 million) merger to consolidate their lithium mines in Australia, Canada and Argentina, with prices for the metal soaring on growing demand for electric vehicles.
The offer, swapping one General Mining share for 1.65 new Galaxy shares, is the latest in a push by Australian-listed companies to mine lithium, essential in powering non-internal combustion engines and led by companies such a Tesla Motors , Nissan and BMW.
The deal, announced by both firms during a call with media, is also aimed at assembling an institutional investment-grade company capitalised at around A$700 million to provide large investors with a way into Australian lithium, where most players are little more than penny stocks.
Shares in Galaxy and General Mining have appreciated some 1,100 percent and 1,400 percent respectively over the past year on the back of the boom in lithium.
Australia has seen a stampede of proposals to mine lithium in the past 12 months, with more than 20 companies in various stages of development in the Pilbara region of Western Australia state alone.
Lithium prices have risen to over $20,000 a tonne from about $7,000 a tonne last September, according to metals consultancy CRU.
Industry website Asian Metal says lithium carbonate, the compound used in batteries, has jumped by 76 percent in the past 12 months.
"The price of lithium today is incentivising companies to produce," said Shaw and Partners analyst Peter O'Connor. "People are coming out of the woodwork with lithium." Continued...