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$217m vanadium merger

Consolidation has kicked off in the vanadium sector, with two WA explorers agreeing to a $217 million all-paper merger. The merger is driven by the desire for single ownership of the same highly prospective orebody and the goal of both companies to gain more scale in the eyes of investors.

On Monday, Australian Vanadium (ASX:AVL) and Technology Metals Australia (ASX:TMT) finalised a deal to bring together their adjoining flagship projects near Meekatharra in the State’s Mid-West region. AVL will lead the merger, acquiring TMT in a deal that offers 12 of its shares for every TMT share held. This puts the paper price at just over 32 cents for TMT shares, compared to the 27 cent close last Friday.

If the merger proceeds, RCF, the major shareholder in TMT (and the largest shareholder in AVL), has committed to subscribing $15 million to an institutional placement, totaling $20 million.

In their statements to the ASX on Monday, the two companies said, “the consolidation of two adjoining projects across one orebody provides a unique opportunity to realise operational and corporate synergies by creating a single integrated project. The combined group will become the leading Australian vanadium developer with a world-class asset of scale, located in a Tier-1 mining jurisdiction.”

AVL CEO Graham Arvidson stated, “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.” He added that the merger would unlock material synergies for both sets of shareholders, making AVL the leading force in the Australian vanadium sector.

TMT CEO Ian Prentice welcomed the consolidation of the Gabanintha vanadium orebody in WA, describing it as “arguably one of the best undeveloped vanadium resources in the world.”

Apart from these broad reasons for the deal, the two companies anticipate synergies in exploration, feasibility, and development work on the orebody, promising a 25-year mine life and the highest-grade Australian vanadium project. They also foresee better opportunities for resource expansion, improved terms from suppliers and governments, and a potential catalyst for future vanadium flow battery production in Australia.

The merger aims to provide the new company with “increased market relevance, liquidity, and balance sheet” by creating a leading ASX-listed vanadium company with a pro forma market capitalisation of $217 million and pro forma cash of $52.1 million post-completion of the Placement. The combined entity is well-funded for the next phase of project development activities.

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