Why Peak Rare Earths Shareholders Should Consider Shenghe’s A$158M Acquisition Scheme
Peak Rare Earths Limited has entered a scheme of arrangement with Shenghe Resources (Singapore) Pte. Ltd., valuing the company at approximately A$158 million. The scheme offers Peak shareholders a cash consideration of no less than A$0.359 per share, representing a 199% premium to the last closing price.
- Proposed acquisition by Shenghe Resources via scheme of arrangement
- Scheme values Peak at ~A$158 million, A$0.359 per share cash consideration
- 199% premium to Peak’s last closing share price before announcement
- Unanimous recommendation by Peak Independent Board Committee
- Independent Expert concludes scheme is fair and reasonable for non-associated shareholders
Background and Transaction Details
Peak Rare Earths Limited (ASX, PEK), an Australian rare earths exploration and development company, has agreed to be acquired by Shenghe Resources (Singapore) Pte. Ltd. through a court-approved scheme of arrangement. The transaction values Peak at approximately A$158 million, with a cash consideration of no less than A$0.359 per share, based on Peak’s fully diluted issued capital as at the record date.
This consideration represents a substantial premium of 199% to Peak’s last closing share price of A$0.12 prior to the announcement of the scheme in May 2025. The premium also significantly exceeds the 30-day volume weighted average price of A$0.132 per share.
Key Asset, The Ngualla Rare Earth Project
Peak’s flagship asset is the Ngualla Rare Earth Project in Tanzania, in which it holds an 84% interest. The project is one of the world’s largest and highest-grade deposits of neodymium and praseodymium (NdPr), critical rare earth elements used in electric vehicle motors, wind turbines, and other green technologies.
The project benefits from a Special Mining Licence granted by the Tanzanian government and a binding offtake agreement with Shenghe covering 100% of rare earth concentrate production for an initial seven-year term. The project has completed extensive feasibility and engineering studies, including a Bankable Feasibility Study update and Front-End Engineering and Design (FEED) study.
Board and Expert Recommendations
The Peak Independent Board Committee, excluding Dr Shasha Lu who represents Shenghe and abstains from the recommendation, unanimously recommends that shareholders vote in favor of the scheme. This recommendation is subject to no superior proposal emerging and the Independent Expert continuing to conclude that the scheme is in the best interests of non-associated shareholders.
RSM Corporate Australia Pty Ltd, the Independent Expert appointed by Peak, has assessed the scheme as fair and reasonable for non-associated shareholders. Their valuation of Peak shares on a controlling basis ranges from A$0.273 to A$0.341, below the scheme consideration, supporting the conclusion that the scheme is beneficial to shareholders.
Scheme Conditions and Next Steps
The scheme is subject to several conditions, including approval by the requisite majority of Peak shareholders at the scheme meeting scheduled for 16 September 2025, approval by the Supreme Court of New South Wales, and regulatory approvals in Tanzania. The second court hearing to approve the scheme is set for 18 September 2025.
Shareholders registered as at 7.00pm (Sydney time) on 14 September 2025 will be entitled to vote. Proxy forms have been dispatched, and shareholders are encouraged to participate either in person or by proxy.
Implications for Shareholders and Risks
If the scheme is implemented, shareholders will receive cash consideration and cease to hold Peak shares, foregoing any future upside from the company’s operations. However, the scheme provides certainty of value and removes risks related to project funding, development, and geopolitical uncertainties, particularly those arising from recent regulatory developments affecting joint ventures with Chinese entities.
If the scheme does not proceed, Peak faces near-term funding risks, project development and operational risks, and the potential for its share price to decline below current levels. The company would need to seek alternative funding and continue as a standalone ASX-listed entity.
Shenghe’s Intentions Post-Acquisition
Shenghe intends to develop the Ngualla Project as its primary business focus, subject to governmental approvals. It plans to reconstitute the Peak board with its nominees and retain Peak’s existing employees where commercially appropriate. Shenghe’s strong cash position, with approximately US$120 million on hand, supports its ability to fund the scheme consideration and project development.
Bottom Line?
As Peak shareholders prepare to vote, the scheme offers a compelling premium and certainty, but the outcome hinges on regulatory approvals and the potential for competing proposals.
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?
- What are the detailed tax implications for shareholders, especially regarding Tanzanian tax laws?