Lithium Power International Limited, engages in the identification, acquisition, exploration, and development of lithium assets in Chile and Australia. The company holds interest in the Maricunga lithium brine project covering 1,125 hectares of mineralised ground in Salar de Maricunga located in the Atacama Region, Chile. It also holds interest in Greenbushes and Pilgangoora project located in Western Australia; and Tabba Tabba project located in North-west Australia. Lithium Power International Limited was incorporated in 2015 and is based in Sydney, Australia.
Days Held138 days
Gross Return4.6%
Event TypeTakeoverLithium Power International, takeover, and profit in 5 months
Prospective lithium producer LPI announced in October announced a binding deal with Chilean government-owned Codelco at $0.57. Ultimately, members stand to return at least 4.6% (and as high as 8.6%) in roughly five months. Frustratingly, the unnecessary FIRB delay impacted the annualised return of the investment, but the annualised return of at least 11% was still worthwhile.
Events timeline:
Current advice: Closed
Short-term, medium-risk Event Portfolio investment
Latest Update: 4 March 2024, 2:00pm
After two extensions, the Foreign Investment Review Board (FIRB) finally provided its approval for the LPI deal. Additionally, the court approved the scheme this morning, so the final two conditions have now been met. The stock will now cease trading at the close of trade tomorrow, with payment of $0.57 due on 14 March.
Members originally bought LPI at $0.545 and below (with the stock trading as low as $0.525 since our recommendation), and members stand to return at least 4.6% (and as high as 8.6%) in roughly five months. Frustratingly, the unnecessary FIRB delay impacted the annualised return of the investment, but the annualised return of at least 11% was still worthwhile.
We will now cease coverage of LPI and record it to the track record.
Update: 9 February 2024, 5:00pm
We were frustrated to read the update from LPI yesterday that revealed a further extension request from the Foreign Investment Review Board (FIRB). While the company stated that an extension is not unusual, it is surprising to us that a company that owns a lithium project in Chile has experienced such a long process in receiving approvals to sell to a Chilean mining company. The fact that LPI is listed in Australia speaks more to the availability of capital in a mature stock market such as the ASX, but for all intents and purposes, this is the sort of asset that offers no significance to the Australian national interest. With that in mind, it’s hard to see this delay as nothing more than an inconvenience, and it would be an unprecedented move by FIRB to block this deal.
We are therefore content to continue holding the stock, even though the annualised return is being diluted as the deal extends. Payment, assuming FIRB approval is received, is now expected on 14 March, which is a three-week delay on the previous timetable. LPI remains a hold while we await FIRB approval.
Update: 24 January 2024, 14:00pm
LPI yesterday held the scheme meeting to allow members to vote on the proposed $0.57 offer by Codelco. As expected, the deal was supported by an overwhelming majority of shareholders. Frustratingly, the timeline of the deal has blown out slightly as the FIRB (Foreign Investment Review Board) has advised of a delay in its approval. We saw a delay from FIRB in approving the Estia Health (EHE) deal and, given the recent Christmas break, expect that there is nothing sinister behind the delay. LPI’s major asset is a lithium project in South America, and it’s very unlikely FIRB would see any issues in that asset sold to a foreign buyer.
Assuming FIRB approval comes shortly, the new date for court approval is 13 February, with the stock ceasing trading at the close of trade the following day. Shareholders will then be paid the scheme consideration on 23 February. We will update members further once the final approvals have been received.
Update: 5 January 2024, 17:00pm
The scheme meeting to vote on the acquisition of LPI for $0.57 per share is due to be held on 23 January, so we are now happy for members to submit votes in support of the deal. To do so, please visit https://www.votingonline.com.au/login and enter the details provided on the proxy form accompanying the scheme booklet. Alternatively, there is a QR code on the form that will access the voting section of the registry website.
Once you have accessed the section of the website to vote, we recommend voting ‘FOR’ all proposed resolutions. We will update members next after the scheme results are released, and if all things go to plan, members will be paid $0.57 per share on 16 February.
Update: 18th October 2023, 11:30pm
Prospective lithium producer LPI announced this morning that it had signed a binding scheme implementation agreement (SIA) with Chilean government-owned Codelco which will see LPI shareholders paid $0.57 per share. The talks between LPI and Codelco were publicised recently by the company and triggered a massive rally in the share price, but we have stayed on the sidelines until something more concrete developed.
With today’s announcement, we can now ascertain whether the stock is worthy of investment. Codelco is a rock-solid bidder with very deep pockets and many complementary assets near LPI’s major asset, the flagship Maricunga project. Additionally, changes in Chile’s policies regarding lithium have changed this year and the government is attempting to exert more control over the country’s lithium reserves, which suggests that Codelco is likely to be the sole bidder for LPI (despite LPI’s claims that the ‘standing of its concessions and permitting according to Chilean law is solid’.
The conditions within the SIA are customary in nature, and it seems a good bet the $0.57 offer will succeed without any speedbumps. LPI’s major shareholder has agreed to support the proposal in the absence of competing bids, and importantly there are no outs for Codelco in the event lithium prices fall from current levels. The company has also provided a timeline for completion, with payment expected at the beginning of February. Overall, that puts the holding time at roughly 3.5 months. With the stock trading at $0.545 today, the annualised return is a very attractive 15%.
We are therefore recommending members buy LPI at no higher than $0.545 for a short-term, medium-risk Event Portfolio investment.
