Australian lithium explorer Azure Minerals has agreed to a A$1.63-billion takeover by Chilean mining giant Sociedad Quimica y Minera de Chile (SQM).

SQM presented the board with an offer of A$3.52 a share on a fully diluted basis. Should the scheme of arrangement not be successful, SQM will make an offmarket takeover bid of A$3.50 a share in cash.

SQM is Azure’s biggest shareholder and has previously moved to buy the company. In August, the Azure board rejected a proposed offer of A$2.31 a share.

MD Tony Rovira said on Thursday that the new transaction was in the best interests of Azure shareholders.

“Whilst we firmly believe that Andover has the potential to be a major lithium project, there is significant time, cost and risk associated with developing a project of this scale, particularly in the context of an uncertain broader economic outlook. As such, the board believes that the transaction provides Azure shareholders with a compelling opportunity to de-risk their investment and realise certain value at an attractive premium to historical trading levels,” he said.

The scheme consideration represents a premium of 44.3% to the last closing price of Azure on Friday and a premium of 55.9% to the ten-day volume-weighted average price of the company.

SQM CEO Richardo Ramos said that the Andover project, in Pilbara, fitted perfectly with the company’s lithium business portfolio.

“The expertise we have gained developing the Mount Holland lithium project, also in Western Australia, along with more than 20 years in the lithium business, should enable us to successfully develop this project,” he said.

The Andover project comprises hundreds of outcropping spodumene-bearing, lithium-rich pegmatites within an area of 9 km east-west and up to 5 km north-south. Surface sampling returned numerous high-grade lithium assays between 1% and 5% lithium oxide.

Azure owns 60% of Andover, while the remaining 40% of the project is ultimately controlled by local investor Mark Creasy.

Azure has previously announced an exploration target for Andover of 10-million to 240-million tons, grading 1.0% to 1.5% lithium oxide, equivalent to 2.5-million to 8.9-million metric tons of lithium carbonate equivalent.

One of Azure’s major shareholders, Deutsche Balaton/Delphi Unternehmensberatung has confirmed to Azure that it supports the transaction.