Vancouver mining mogul Frank Giustra.Michael Falco/The Globe and Mail
A Chinese investment firm is buying a Frank Giustra-backed lithium exploration company run by a 29-year-old rookie CEO.
On Monday, Nextview New Energy Lion Hong Kong Ltd. announced it is paying $265-million for Lithium X Energy Corp. – the second investment by the Chinese investment firm in a Canadian-listed lithium company in the past few days.
The latest deal was announced in the midst of an ebullient market for battery metals such as cobalt and lithium, which have soared in price in recent years thanks to demand from the electric car industry.
Nextview is offering $2.61 a share for Vancouver-based Lithium X, a 22.5-per-cent premium to the Friday closing price.
Shares in Lithium X rose by 17 per cent to close at $2.49 apiece on the TSX Venture Exchange on Monday.
Lithium X's chief asset is the Sal de los Angeles lithium project in Argentina.
According to a National Instrument 43-101 report, the project holds just more than one million tonnes of indicated reserves of lithium carbonate equivalent.
The company eventually hopes to become a low cost supplier of lithium to the battery industry.
Lithium X hasn't been a public company for long.
It only came to market in November, 2015, in a reverse takeover of Royce Resources Corp., a TSX Venture-listed shell company in which well-known mining financier Frank Giustra was a major shareholder. Mr. Giustra also participated in Lithium X as an early stage shareholder in seed financing rounds as low as 15 cents a share. In 2016, the company acquired a 50-per-cent stake in Sal de los Angeles, eventually buying the remainder this past summer. Since going public, it has raised about $50-million in a number of different financings.
"We've been approached for almost a year now by multiple potential bidders," said Lithium X's founder and chief executive officer Brian Paes-Braga in an interview.
He added that the firm had been in discussion with the Chinese investment fund since the summer. Should the acquirer walk away from the deal it will be on the hook for a $20-million break fee. Lithium X shareholders vote on the deal in February.
In a statement, Yaping He, managing Partner of NextView said the Lithium X acquisition represents a "cornerstone investment" in the firm's strategy of becoming a global player in the new energy sector.
Privately held Nextview manages about $4.5-billion (U.S.) worth of assets. It recently set up a $1.5-billion fund to acquire assets in the resources and new energy sectors. Last Friday, Nextview announced it was investing $53-million (Canadian) to gain a 20 per cent stake into Bacanora Minerals Ltd., a TSX Venture-listed lithium exploration and development company.
Former investment banker Mr. Paes-Braga, pitched the idea for Lithium X to Mr. Giustra when he was only 27, and is the firm's second-biggest shareholder. The biggest shareholder is resource investment company Aberdeen International Inc. Other major shareholders include U.S. Global Investors, a Texas-based precious-metals mutual fund company, and Harry Pokrandt, chief executive officer of blockchain company Hive Blockchain Technologies, according to filings.
GMP Capital Inc. advised Lithium X on the deal, while Nextview turned to Credit Suisse.
Niall McGee