European Lithium shareholders get an early payday on Greenland rare earths. Pic: Getty Images
- Critical Metals deal could deliver 137% premium for European Lithium shareholders
- Proposal would consolidate 100% ownership of Tanbreez rare earth project in Greenland
- Merger creates ‘more straightforward and more easily understood’ investment case
Special Report: Unless it gets an even better offer, European Lithium will merge with JV partner Critical Metals in a deal that values the combined entity at more than $1 billion.
The Nasdaq-listed Critical Metals (NASDAQ:CMRL) is set to acquire European Lithium (ASX:EUR) in an all-scrip deal at an exchange ratio of 0.035 CRML shares for each EUR share, which values European Lithium at 58c per share – a 137% premium on the last close.
“This transaction will deliver substantial value to EUR shareholders,” European Lithium independent director and IBC chair Michael Carter said.
“The combination will enable EUR shareholders to directly own interests in Critical Metals Corp, which will be strategically positioned as the sole owner of the Tanbreez rare earth project in Greenland and will benefit from substantial cash balances and a portfolio of critical minerals development opportunities.”
The companies, both chaired by Perth’s Tony Sage, are JV partners on the Tanbreez rare earths project in Greenland, of which CRML – a lithium and REE exploration and development company – owns 92.5% and European Lithium the remaining balance.
Strategic push
Operating in geopolitically stable jurisdictions in Greenland and Europe, CRML wants to become a strategic source of critical minerals for defence, advanced manufacturers, the clean energy sector and emerging technologies.
Positioned to deliver a sustainable, reliable, and long-term supply, EUR says the world-class Tanbreez project is an advanced, permitted asset poised to become a cornerstone in the global supply of rare earth elements for North America and Europe.
Consolidation of ownership in Tanbreez will remove any minority ownership discount and align governance in the push towards development, according to EUR.
European Lithium’s largest asset is its 34% shareholding in CRML, and consolidation would create a “more straightforward and more easily understood” investment proposition.
Consolidation is also expected to resolve ongoing overhang associated with EUR’s material ownership stake in CRML, removing focus on future monetisation, governance and strategic intent.
The proposed exchange ratio represents a significant implied pro forma ownership to EUR shareholders, which will own approximately 45% of the combined company.
Options in the money
The deal will be implemented by CRML acquiring 100% of the issued securities of the Company via scheme of arrangement for scrip consideration.
Under the proposal, all listed EUR options will be acquired via an option scheme of arrangement.
EUR listed options and unlisted options will be cancelled in consideration for CRML shares on a cashless basis.
Option holders will receive CRML shares reflecting the “in the money” value of their options, calculated by reference to the CRML’s 20-day volume weighted average share price prior to closing.
Option holders will not be required to fund the exercise price.
What’s next
EUR and CRML have agreed to negotiate exclusively with one another with a view to complete due diligence and execute a binding scheme implementation deed by May 7, 2026.
But the exclusivity restrictions do not prevent the EUR board from responding to a genuine unsolicited better proposal.
CMRL also owns the Wolfsberg hard-rock lithium project, one of Europe’s most strategically important lithium assets located just 270 km southwest of Vienna.
Critical Metals Corp says the fully licensed, government-backed lithium mine is primed to play a central role in the region’s lithium-ion battery supply chain.
This article was developed in collaboration with European Lithium, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
