Pursuit Minerals: A Potential Lithium Takeover Candidate in Argentina

Pursuit Minerals may emerge as a potential acquisition target in Argentina’s lithium sector, bolstered by a strategic development plan at its Rio Grande Sur asset. The company’s significant resource increase positions it favorably amid industry consolidation, drawing attention from larger mining firms. Pursuit focuses on low-cost production capabilities, aligning with market trends.

Mergers and acquisitions (M&A) can significantly enhance shareholder value, particularly for those invested in targeted firms. The current spotlight is on ASX explorers, including Pursuit Minerals, which may become attractive targets for larger firms, especially amidst recent activities in the lithium market. In October of last year, Rio Tinto pursued a $10 billion acquisition of dual-listed lithium producer Arcadium, emphasizing the industry’s positive outlook despite an 80% decline in lithium spot prices.

In recent developments, Rio Tinto successfully completed its acquisition, securing about 5% of the global lithium supply, alongside valuable development-ready sites in South America and Canada. Among its lithium assets in Argentina are the substantial Olaroz lithium facility and the historic Fenix project, the country’s oldest and largest lithium mine. Consequently, investors are now vigilant about possible future takeover targets as consolidation in Argentina’s lithium sector progresses.

Significant activities surround Arcadium’s land, with many adjoining salars already under major companies’ control. For example, Gangfeng controls substantial portions of several adjacent areas, and Lithium Argentina has stakes in various projects alongside Rio Tinto. Additionally, a noteworthy acquisition in December last year involved a $180 million deal for Lithium Chile’s Arizaro project, underscoring the active M&A landscape.

Entry into Argentina’s lithium sector is becoming increasingly challenging, with 20-30% of brine assets under Chinese control and supply anticipated to lag behind rising demand. Nevertheless, several small-cap junior companies, including Pursuit Minerals, have favorable projects within this promising region, drawing the attention of larger industry players. Pursuit Minerals has made significant progress towards becoming a commercial producer at its Rio Grande Sur asset within the lucrative ‘Lithium Triangle’.

The company’s large-scale development plan incorporates a modular design under Phase 1, which involves relocating its existing 250-tonnes-per-annum lithium carbonate plant to facilitate early-stage production, mitigating processing risks and generating immediate cash flow. Subsequent phases aim to expand production significantly, with plans to reach an output of 15,250 tonnes per annum, reflecting anticipated transitions in market supply and demand.

A notable 339% resource increase last year has enhanced Pursuit’s positioning in Argentina, prompting expectations of interest from major mining firms seeking substantial lithium investments. Pursuit’s managing director, Aaron Revelle, expressed confidence, stating the Rio Grande Sur project’s potential to be seen as an acquisition target due to its low-cost resource and familiar processing technology, drawing parallels to Orocobre’s trajectory towards a merger with Rio Tinto.

Revelle highlighted the company’s strategy of appealing to prospective partners by focusing on production capability at a competitive cost curve, particularly in light of current pricing trends. While many assets may have been enticing during 2022/2023’s price peak, a smaller selection remains viable at the present price point, with Rio Grande Sur meeting these criteria.

In conclusion, Pursuit Minerals stands at a pivotal moment, potentially becoming a prominent acquisition target in the lithium sector of Argentina following significant industry consolidation. With its strategic development plan at the Rio Grande Sur project and noteworthy resource increases, Pursuit is well-positioned to attract interest from larger mining entities. As the market evolves, the company’s focus on low-cost production capabilities aligns with the current economic climate, further enhancing its appeal for prospective acquirers.

Original Source: stockhead.com.au