What Gina Rinehart's $1.7b Azure Minerals play tells us about her lithium ambitions
Investors and Rinehart watchers in the mining and investment banking communities should all take note: the $1.7 billion bid has some key lessons in it.
Gina Rinehart has made little secret of her desire to gain significant exposure to lithium this year. And it looks like the mega-billionaire has finally found a way to achieve that aim after her private company Hancock Prospecting teamed up with Chilean chemicals giant Sociedad Quimica y Minera (SQM) for a $1.7 billion stab at lithium explorer Azure Minerals this week.
There are plenty of lessons for investors, mining executives and advisors in the dealmaking community from this bid. The first, and most obvious, is that it shows just how bullish Rinehart is on lithium, the key ingredient in electric vehicle batteries among other uses.
UBS analysts said based on their modelling the Azure bid implies a spodumene concentrate price of USD1,630 per tonne, which is 55% higher than spot prices and 15% above long-term estimates.
While there will be plenty of hurdles for an SQM and Hancock controlled Azure to overcome in the journey from exploration to production, the bid "shows a willingness from some players to look through the current price cycle and pay up for some fairly long dated production," UBS analyst Levi Spry wrote.
