Charger Metals (ASX:CHR) said in a Monday (August 19) press release that Core Lithium (ASX:CXO,OTC Pink:CXOXF) has made an unsolicited, non-binding indicative offer to acquire the company.
According to the company, the offer from Core values Charger at AU$0.084per share, or AU$6.5 million, which equates to a 23 percent premium on Charger's closing share price on August 16.
The company's board believes the offer doesn't "fully reflect the Company’s value and prospects," but it is open to continuing engagement with Core with the view to pursuing the best outcomes for Charger shareholders.
Core published a response on the same day, saying that its offer wasn't supposed to have been made public.
"Core is disappointed Charger chose to release details of its Proposal, notwithstanding that it was clearly stated to be confidential. It was subject to several conditions, including due diligence, and is therefore incomplete," the release states.
The company also said it hasn't received full due diligence access from Charger.
Core's interest in Charger is driven by potential synergies between its Finniss lithium project and Charger’s Bynoe lithium project, both of which are located in Australia's Northern Territory.
The company notes that it has mineral resources of 48.2 million tonnes at 1.26 percent Li2O2, giving it one of Australia's top 10 lithium resources. It also has an existing mine with the infrastructure needed to restart production. Core believes that combining its holdings with the exploration potential at Bynoe will benefit shareholders of both companies.
Bynoe spans 63 square kilometres within the lithium-rich Litchfield pegmatite field, and is located approximately 35 kilometres southwest of Darwin. Charger has already drilled three diamond holes and 66 RC holes across seven prospective areas at the site in 2023, with more than 20 identified lithium prospects yet to be drill tested.
Core also said it is willing to support Charger's exploration joint venture at the Lake Johnston lithium project, also in Western Australia. Charger is working to advance the asset with major miner Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO).
Core’s Finniss project, covering over 500 square kilometers, surrounds the Litchfield Pegmatite Field. The company argues that a merger would benefit Charger’s shareholders and is well-positioned to advance Charger’s projects.
No final agreements have been reached, and both companies have emphasised that there is no certainty of a transaction.
Core is committed to keeping the market informed following its disclosure obligations.
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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
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