Western Lithium (WLC.TO) and Lithium Americas (LAC.TO) have announced they have entered into a merger agreement whereby Western Lithium will issue new shares to acquire all outstanding shares of Lithium Americas. Both companies call it a ‘merger’, but it definitely looks more like a buyout as Western Lithium is paying a 58% premium (based on the 20 day VWAP).
This is an interesting development and could potentially mean the Kings Valley development will be postponed by a few years and we’re now doubting the project will reach commercial production before the end of this decade. That’s not necessarily a bad thing as Western Lithium can now focus on the development of the Cauchari-Olaroz lithium project in Argentina which is permitted for construction.
This merger makes a lot of sense, and this would create a clear mid-tier lithium company with the potential to produce almost 50,000 tonnes of LCE per year.
Disclosure: The author holds no position in Western Lithium or Lithium Americas. Please see our disclaimer for current positions.