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Liontown raises A$450m for Kathleen Valley development

1st December 2021

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Lithium developer Liontown Resources on Wednesday launched a fully underwritten institutional placement to raise A$450-million to develop its Kathleen Valley project, in Western Australia.

The company would place 272.7-million shares, at a price of A$1.65 each, representing a 14.1% discount to Liontown’s last closing price on November 30, and a 9.3% discount to its ten-day volume weighted average share price.

The shares will be placed under the company’s existing placement capacity, and no shareholder approval would be required.

“This is a fantastic outcome which caps off a transformational year for Liontown. Thanks to the support of many existing and new investors, we have been able to secure a capital raising that underpins the capital cost of the Stage 1, 2.5-million-tonne-a-year development at Kathleen Valley,” said MD and CEO Tony Ottaviano.

“Our ability to achieve this result reflects the underlying quality of the Kathleen Valley asset, the exceptional work our team has done in completing the definitive feasibility study (DFS) and downstream scoping study, and the huge opportunity in front of us to build a new world-class battery materials production hub in a Tier-1 location in Western Australia’s North-eastern Goldfields.”

The DFS estimated that the project would require an initial capital investment of A$473-million to support a 2.5-million-tonne-a-year operation, producing some 500 000 t/y of spodumene concentrate.

During year six of the operation, a further A$66-million investment would be made to increase the project capacity to 4-million tonnes a year, delivering 700 000 t/y of spodumene concentrate.

Based on this production scenario, the Kathleen Valley operations is expected to have a mine life of some 23 years, and would generate life-of-mine free cash flows of A$12.2-billion. The DFS estimated a post-tax net present value of A$4.2-billion and an internal rate of return of 57%, with a payback period of 2.3 years.

“Following the successful completion of the equity raising, Liontown will be well capitalised with certainty of funding for the Stage 1 Kathleen Valley development, putting us in an enviable position moving into 2022,” said Ottaviano.

“The board and management team believe it is prudent for Liontown to raise equity at this stage. Equity funding provides us with maximum flexibility with regards to offtake and pricing, while also retaining optionality to accelerate development or expansion to quickly take advantage of market opportunities that may arise. At the completion of the offer, we will be able to commence ordering of long-lead items and to secure our preferred contractors to ensure that we remain on schedule for first production in 2024.

“Having the balance sheet to do these things quickly, and to secure the best available people and organisations to support us, is an important consideration in the current competitive market for people and services in the Western Australian mining industry.”

In addition to the share placement, Liontown has also announced a share purchase plan (SPP) to raise up to A$40-million of additional funding.

Existing eligible shareholders would be given the opportunity to subscribe for up to A$30 000 worth of new shares in the company, also at a price of A$1.65 a share. The SPP will close on January 14.

Funds raised will go towards the development of the Kathleen Valley project, as well as to fund the prefeasibility study on the downstream operation, and to fund further exploration work.

Edited by Creamer Media Reporter

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