PLS To Takeover Latin Resources in huge deal
Pilbara Minerals Limited
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PLS To Takeover Latin Resources in huge deal

Pilbara Minerals Limited (ASX: PLS) has announced a strategic acquisition of Latin Resources Limited (ASX: LRS) through a binding Scheme Implementation Agreement (SIA). The all-share transaction will enable Pilbara Minerals to secure Latin Resources' flagship Salinas Lithium Project in Brazil, positioning the company for significant growth in the lithium market. Latin Resources shareholders are set to benefit from a substantial premium on their shares, while also gaining exposure to Pilbara Minerals' Tier 1 Pilgangoora operation in Australia.

A Strategic Move in the Lithium Market

Pilbara Minerals' acquisition of Latin Resources represents a strategic maneuver designed to bolster its position as a leading global supplier of lithium materials. The deal will see Pilbara Minerals acquire 100% of Latin Resources' shares through a Court-approved scheme of arrangement, significantly expanding its portfolio with the addition of the Salinas Lithium Project in Minas Gerais, Brazil.

Salinas Lithium Project: A Game-Changer

The Salinas Lithium Project is poised to become one of the top 10 hard rock lithium operations globally, outside of Africa. This project offers Pilbara Minerals a unique opportunity to diversify its operations and supply new markets, particularly in North America and Europe.

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The acquisition will immediately add approximately 20% to Pilbara Minerals' existing Mineral Resources, with the potential to contribute up to 30% of the company's pro-forma steady-state production once fully operational.

Compelling Benefits for Latin Resources Shareholders

For Latin Resources shareholders, the deal offers an immediate premium, unlocking the value of the Salinas project by leveraging Pilbara Minerals' proven expertise in developing and operating hard rock lithium projects. Shareholders will receive 0. 07 new Pilbara Minerals shares for each Latin Resources share held, giving them a 6. 4% stake in the enlarged entity. This translates to a 57% premium on the 10-day volume-weighted average price (VWAP) of Latin Resources shares and a 32% premium on the 30-day VWAP.

Enhancing Market Position and Access to Capital

The acquisition is expected to be accretive for Pilbara Minerals across several key metrics, including net asset value (NAV), Mineral Resources, and future production. Latin Resources shareholders will benefit from enhanced market positioning, increased liquidity, and better access to capital markets. Additionally, the larger free float and inclusion in relevant ASX and global indices will provide further upside.

Leadership Continuity and Community Engagement

Chris Gale, Managing Director of Latin Resources, will join Pilbara Minerals as a consultant for 12 months to ensure leadership continuity and foster relationships with key stakeholders in Brazil. This move underscores the commitment of both companies to advancing the Salinas project, with a strong foundation of community support already in place.

Strategic Rationale for Pilbara Minerals

The acquisition aligns with Pilbara Minerals' strategy to diversify its operations and enhance its global footprint in the lithium market. The Salinas project offers near-term production potential, supported by the pro-mining stance of the Minas Gerais State and the project's eligibility for fast-tracked permitting processes. The transaction structure preserves Pilbara Minerals' strong balance sheet, ensuring the company remains well-capitalized to fund future growth initiatives.

Latin Resources: A New Chapter

Latin Resources' Board has unanimously recommended the Scheme, highlighting the attractive premium and the opportunity for shareholders to retain ongoing exposure to the development of Salinas as part of a larger, more diversified enterprise. The Scheme is supported by Latin Resources' largest shareholder, José Luis Manzano, and the company's Board, who collectively hold 12. 7% of the total issued shares.

The acquisition of Latin Resources by Pilbara Minerals is a win-win for both companies and their shareholders. It strengthens Pilbara Minerals' position as a leading lithium producer while offering Latin Resources shareholders significant value and ongoing participation in the lithium market's growth. As the transaction moves towards completion, the combined expertise and resources of both companies are expected to unlock the full potential of the Salinas project, delivering long-term value to all stakeholders.

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