Shareholders of Australian lithium explorer Essential Metals have turned down a A$136m ($92m) buyout proposal from a joint venture (JV) of Tianqi Lithium and IGO.

In January, the Tianqi Lithium Energy Australia (TLEA) JV offered A$0.50 a share for the takeover and signed a scheme implementation agreement (SIA).  

China-based Tianqi Lithium owns 51% of the JV while Australia’s IGO owns the remaining 49%.

TLEA’s offer required the approval of at least 75% of Essential shareholders, a parameter that was not achieved, with only 31.5% of shareholders voting in favour.

The companies began a consultation to assess if the deal could materialise via alternative means.

On failing to reach a deal by 21 April, either company could scrap the SIA without a break fee.

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By GlobalData

A takeover of Essential would have added to TLEA’s pipeline the undeveloped Pioneer Dome lithium deposit in Australia.

This JV already has a 51% holding in the Greenbushes Lithium Mine and owns 100% of the Kwinana Lithium Hydroxide Refinery.

The rejection of TLEA’s proposal comes shortly after Mineral Resources raised its stake in Essential to 19.55%.

However, Mineral Resources has so far not proposed a counterbid.

Essential chairperson Craig McGown stated: “The Essential board respects the wishes of the shareholders who voted against the scheme and will now engage with TLEA to determine the next steps in accordance with the scheme implementation agreement.

“The company will provide a more fulsome update on its forward plans for the Pioneer Dome Lithium Project in due course, noting that whilst the SIA remains in place, the company cannot engage with potential strategic off-take partners and with Mineral Resources Limited, which recently acquired a 19.55% stake in the company.”