More action in the lithium sector yesterday with shares in Liontown Resources (ASX: LTR) going into a trading halt with plans to raise up to $490 million to allow it to derisk the company’s key Kathleen Valley project.
Liontown revealed a fully-underwritten institutional placement to raise approximately $450 million with another $40 million to be sought from smaller shareholders via a share purchase plan at the same issue price.
The company will issue around 272.7 million new shares at $1.65 – a 27 cents a share or 14% discount to the last sale price of $1.92.
While the SPP is capped at $40 million, Liontown has the right to accept oversubscriptions or scale back applications at its discretion. The plan is expected to open on December 10, close on January 14.
Liontown says it will use the money raised from the issue to fund the development of its key Kathleen Valley lithium project in WA.
The money will also be used to progress the downstream pre-feasibility study for the proposed lithium hydroxide plant as well as further exploration drilling.
The company said the equity raising “puts Liontown in a strong position to finalise discussions with offtake partners and commercial lenders, order long-lead items, finalise permitting and maintain maximum operational flexibility to accelerate development towards first production in 2024.”
“Following completion of the Equity Raising, Kathleen Valley will be significantly de-risked and Liontown will have the financial capability to deliver on its strategy of becoming an ESG-leader and a globally significant provider of battery materials for the rapidly growing clean energy market,” the company said on Wednesday.
According to CEO Tony Ottaviano the successful completion of the equity raising, will see “Liontown will be well capitalised with certainty of funding for the stage one Kathleen Valley development, putting us in an enviable position moving into 2022.”
Three weeks ago, Liontown revealed that a final feasibility study for Kathleen Valley estimated that the project would require an initial capital investment of $473-million to support a 2.5-million-tonne-a-year operation, producing 500 000 tonnes a year of spodumene concentrate.
During year six of the operation, a further $66-million investment would be needed to increase the projectcapacity to 4-million tonnes a year, delivering 700 000 tonnes a year of spodumene concentrate.
Based on this production scenario, the Kathleen Valley operations is expected to have a mine life of 23 years.