PERTH (miningweekly.com) – ASX-listed Australian Vanadium has announced a A$217-million merger agreement with fellow listed Technology Metals Australia.

Under a scheme of arrangement, Australian Vanadium would acquire all of the Technology Metals shares on issue, offering 12 of its own shares for every Technology Metals share held, implying an offer price of 32.4c a share based on Australian Vanadium’s last closing price of 2.7c a share.

If the scheme is approved, Australian Vanadium’s existing shareholders will hold some 58% of the combined group while Technology Metals’ shareholders will hold the remaining near 42% interest.

The offer represents a 9.8% premium to Technology Metals’ last closing price, and a 26.7% premium to the company’s 30-day volume weighted average share price.

Australian Vanadium and Technology Metals hold two adjoining lithium projects in Western Australia and consolidation of the two projects on the same orebody would drive synergies, the companies said in a joint statement.

The combined mineral resource base represents a mine life of 25 years, with an opportunity to further extend the mine life and expand production.

The increased scale of the combined company will also improve the ability to raise equity finance and secure project financing for final investment decisions and project development, while also giving the enlarged company improved access to government, export credit agencies and private sector financing.

“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,” said Australian Vanadium CEO Graham Arvidson.

“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. Australian Vanadium’s institutional placement ensures that the combined group will be well-funded to progress integration and the go-forward development strategy.”

The scheme has been unanimously recommended by the Technology Metals board, and the company’s largest shareholder Resource Capital Fund (RCF) has stated its intention to vote its near 18% shareholding in favour of the scheme.

“It is our opinion that RCF’s strong support for the placement highlights their long-term backing of the combined business as well as a broader view on the strengthening vanadium thematic. The transaction will leverage the best of both organisations, including best-in-class technical work, assets and people, and will result in AVL becoming the leading force in the Australian vanadium sector,” said Arvidson.

Technology Metals MD Ian Prentice told shareholders this week that the company was excited about the proposed consolidation of the Gabanintha vanadium orebody to create the leading vanadium development company and enabling the company’s dedicated shareholder base to maintain material exposure to the world’s next primary vanadium producer.

“This all comes at a pivotal time for the global vanadium industry as vanadium flow batteries are established as a critical player in the long duration energy storage market, a key requirement for the world’s transition to net zero and a cleaner future. We very much appreciate our major shareholder RCF’s demonstrable support for the vanadium thematic and the development of this world class asset.”

The transaction will be subject to a number of conditions, including shareholder and court approvals, and an independent expert concluding that the scheme is in the best interest of Technology Metals shareholders.

The deal is also subject to Australian Vanadium raising at least A$15-million in a share placement to support project integration, fund ongoing project and corporate initiatives and to fund general working capital and transaction costs.

Australian Vanadium will issue 603-million shares, at a price of 2.6c each, to raise A$15.7-million. RCF has committed to subscribe for A$15-million of the placement, with the allocations subject to the outcome of a bookbuild process.

The placement will not require shareholder approval, and will be done in a single tranche, expected to settle on September 29.

Arvidson said on Tuesday that the strong support shown for the placement endorsed the merger strategy and the growing investor interest in the vanadium thematic which continues to benefit from the clean energy transition and ongoing electrification of energy supplies requiring storage solutions.

“The placement ensures that the combined group will be well-funded to progress its integration strategy between Australian Vanadium and Technology Metals as well as the go-forward development strategy, and we are excited by the future opportunities,” Arvidson said.