Canadian lithium developer Li-FT Power (TSX-V: LIFT) agreed to buy Australia’s Winsome Resources (ASX: WR1) and add a majority stake in an Azimut Exploration (TSXV: AZM) project to boost its presence in Quebec.
Li-FT signed a “binding scheme implementation deed” to acquire all issued shares of Winsome, offering 0.107 of a common share for each Winsome share acquired, according to a statement issued Monday. The deal values the Australian miner at A$130.8 million ($86 million) on a fully diluted, in-the-money basis.
The acquisition would significantly bolster Li-FT’s footprint in Quebec with the addition of Winsome’s lithium portfolio, led by its 100%-owned Adina project in the Eeyou Istchee James Bay region. With an indicated resource of 1.4 million tonnes at 1.14% Li2O and an inferred resource of 16.5 million tonnes at 1.19% Li2O, the Adina project is considered to be one of the top five largest lithium resources in North America.
The proposed combination remains subject to various conditions. They include a favourable vote by Winsome shareholders at a meeting that’s expected to take place in early April.
The exchange ratio implies a per-share value of A$0.501 for Winsome, calculated using a five-day volume-weighted average price for Li-FT shares on the TSX Venture Exchange. The per-share consideration represents a 62% premium to Winsome’s closing price on Friday.
Expanded Quebec footprint
Winsome jumped 8% to A$0.40 in Australian trading Monday, giving the company a market capitalization of A$97.5 million. Li-FT plunged 14% to C$4.31 by the close of trading in Toronto for a market capitalization of about C$204 million ($148 million).
In addition to acquiring Winsome, Li-FT said it would also acquire a 75% interest in the Galinée property in Quebec from owners Azimut and provincial mining fund SOQUEM. The project lies next to Adina and hosts multiple well-defined prospects.
Li-FT is paying Azimut 2 million shares upfront and $1.5 million in deferred payments for its 50% stake. It’s also paying SOQUEM 1 million shares upfront for a 25% stake. The government-controlled fund will keep a 25% interest.
‘Transformative’ deals
The transactions announced Monday are “transformative” moves that could create one of the largest hard-rock lithium developers in Canada, Li-FT CEO Francis MacDonald said in the statement. The Winsome transaction places Adina “on an exciting path to potentially enhance its scale, resource profile and project economics in the near term,” he added.
Li-FT, which is developing the Yellowknife project in Canada’s Northwest Territories, holds three exploration-stage lithium projects in Quebec. The acquisition of Adina adds a potential two-decade hard-rock lithium operation with annual output of 280,000 tonnes in spodumene concentrates to its production pipeline.
Adina is expected to have a start-up capital cost of US$259 million and a net present value of US$743 million at an 8% discount rate, according to a 2024 scoping study.
Strategic support
Existing Winsome shareholders would own about 35.3% of the combined company on a fully diluted in-the-money basis once the deal closes. The transactions are supported by Li-FT’s strategic shareholder, Avenir Minerals, as well as Winsome’s largest shareholder, Waratah Capital Advisors, which intends to vote in favour of the deal.
“The combined company is expected to have a market-leading position in the James Bay region of Quebec,” said Winsome managing director Chris Evans.
Christopher Williams, analyst at Adamas Intelligence, said the deal undervalues Winsome, adding that Galinee “could’ve been acquired alone without Li-FT’s projects.”
“I understand the balance sheet rationale, but this is a bad deal for Winsome,” he wrote in a post on X.
If the deal closes, Li-FT said it plans to conduct a private placement of C$30 million to fund the “aggressive” exploration and development of Adina-Galinée, and another C$10 million financing for its Yellowknife project. It also plans to apply for a listing on the Australian Securities Exchange.
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