A quiet battle appears to be brewing between Lithium Royalty Corp (TSX: LIRC) and TNR Gold (TSXV: TNR), following an offer by Lithium Royalty to acquire TNR for a small premium.
Lithium Royalty on Friday went public with its attempt to acquire the junior company who as of late has been attempting to become a green energy metals royalty and gold company. Lithium Royalty proposed cash consideration of $0.08 per share, a premium of 45% over the $0.055 closing price of TNR the day before.
Lithium Royalty posited to shareholders that the offer represented a “significant liquidity event” for TNR shareholders, while highlighting that management of TNR has been selling below the offer price since 2021, while being net sellers. Making matters worse, its claimed that 1.5 million options were issued the day after Lithium Royalty made an offer to management, with those options priced at just $0.05 per each.
For its shareholders, Lithium Royalty meanwhile highlighted the Mariana NSR currently held by TNR, which it partially acquired in February 2023. That royalty however is also a focal point of TNR’s rebuttal.
“Given that LRC valued only a portion of the Company at US $9 million, based on its purchase in February 2023 of the 0.5% NSR royalty involving the Mariana Lithium project in Argentina for US $9 million, the offer of CDN $15 million (approximately US $11 million) for the entire Company is considered opportunistic and inadequate,” commented TNR CEO Kirill Klip in his response to the unsolicited, non-binding offer.
“TNR retains a 1.35% NSR on the Mariana Lithium project that is being developed by Ganfeng Lithium in Argentina; we hold a 0.36% NSR royalty on the Los Azules copper project, which is being developed by McEwen Mining in Argentina. TNR also holds a 7% net profits royalty holding on the Batidero I and II properties of the Josemaria project that is being developed by Lundin Mining in Argentina.”
The company also claims a non-binding offer of $0.085 was declined by TNR management in July 2023, following continued talks that have been claimed to be ongoing since January 2022.
Perhaps most bizarrely, one of TNR’s main points of the offer being to low is that it “represents such a small premium to the closing price of $0.0725 on September 29, 2023,” while using this comment to state that the offer is a “low-ball.”
The equity ran on September 29, after Lithium Royalty Corp went public prior to market open on that date, offering $0.08 per share to shareholders.
TNR for its part however claims it has been engaging with multiple parties that are “proposing much higher potential valuations for [their] assets than the present LRC proposal.”
“This opportunistic hostile takeover attempt of TNR following LRC’s partial royalty purchase earlier this year is very disappointing, much like the LRC poor share performance after its IPO this year.” continued Klip.
TNR Gold last traded at $0.07 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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