Peak Rare Earths Acquisition Valued at A$158 Million with A$0.359 Cash per Share

• Proposed acquisition by Shenghe Resources (Singapore) Pte. Ltd.
• Scheme values Peak at ~A$158 million
• Cash consideration of no less than A$0.359 per share
• 199% premium to last closing share price before announcement
• Unanimous recommendation by Peak Independent Board Committee

Background and Transaction Overview

Peak Rare Earths Limited (ASX, PEK), an Australian rare earths exploration and development company, has announced a proposed acquisition by Shenghe Resources (Singapore) Pte. Ltd., a wholly owned subsidiary of Shenghe Resources Holding Co., Ltd. The transaction is structured as a scheme of arrangement, valuing Peak at approximately A$158 million. Under the scheme, Peak shareholders (excluding Shenghe) will receive a cash consideration of no less than A$0.359 per share, representing a significant premium to recent trading prices.

The scheme follows a comprehensive strategic review and negotiations between Peak and Shenghe, including a previously proposed joint venture structure that was ultimately set aside due to geopolitical and regulatory uncertainties. The current scheme offers greater certainty and a superior risk-adjusted outcome for Peak shareholders, according to the Peak Independent Board Committee.

Premium and Expert Support

The proposed cash consideration represents a 199% premium to Peak’s last closing share price of A$0.12 prior to the scheme announcement and a 173% premium to the 30-day volume-weighted average price. This premium reflects the board’s confidence in the value proposition and the strategic importance of the Ngualla Rare Earth Project, Peak’s flagship asset located in Tanzania.

RSM Corporate Australia Pty Ltd, acting as the independent expert, has concluded that the scheme is fair and reasonable for Peak shareholders not associated with Shenghe, and in their best interests in the absence of a superior proposal. This independent opinion underpins the unanimous recommendation by the Peak Independent Board Committee that shareholders vote in favor of the scheme.

Key Conditions and Next Steps

The scheme remains subject to several conditions, including approval by the requisite majority of Peak shareholders at the scheme meeting scheduled for 16 September 2025, court approval, and regulatory approvals in Tanzania. The Tanzanian regulatory approvals are particularly important given the Ngualla Project’s location and the government’s 16% free-carried interest in the project.

If approved and implemented, Peak will be delisted from the ASX and become a wholly owned subsidiary of Shenghe. The Peak board and senior management will be reconstituted under Shenghe’s direction, with intentions to retain existing employees where commercially appropriate and to focus on developing the Ngualla Project as a primary business.

Risks and Considerations

Shareholders should consider risks including project development and funding uncertainties, geopolitical and regulatory challenges, and potential tax implications under Tanzanian law, notably Section 56 of the Tanzanian Income Tax Act, which may impose tax liabilities on changes in control of Tanzanian entities. The scheme offers shareholders certainty of value and an opportunity to exit at a substantial premium, mitigating risks associated with Peak’s standalone development and market volatility.

Peak shareholders are encouraged to carefully review the scheme booklet, consider their individual circumstances, and seek independent financial, legal, and tax advice before voting.

Bottom Line?

As Peak shareholders prepare to vote, the scheme promises a rare earths sector milestone; but regulatory and geopolitical hurdles remain to watch.

Questions in the middle?

• Will Tanzanian regulatory approvals be secured in time to satisfy scheme conditions?
• Could a superior proposal emerge before the scheme meeting or court approval?
• How will potential tax liabilities under Tanzanian law impact the net proceeds for shareholders?