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sIte VIsIt

Liontown planning

has Kathleen Valley

ready to charge

nvestors often recoil at the thought of a major capital raising but with a recent
I financial injection clearing the path towards superior commercial returns,
even the most cautious of shareholders has seen the benefits of Liontown
Resources Ltd’s $490 million placement and SPP.

“ Ptween debt, equity and other financing was struck at $1.65/share, a 14.1% discount late into a SC6 price greater than the DFS
roject funding is always a balance be-
assumption of $US1,287/dmt.
to the previous closing price of $1.96 and
– customers, green loans, Nordic bonds, etc a 9.3% discount to the company’s 10-day “We have been steadfast in our strategy
– so it is about optimising the funding mix to VWAP of $1.82. to negotiate terms that we believe accu-
the benefit of shareholders,” Liontown man- The company set the same price for the rately reflect the significance of our position
aging director Tony Ottaviano explained to $40 million SPP, handing Liontown enough in the global lithium market, as well as the
Paydirt soon after the equity raising was funds to cover the $473 million capex and quality and location of our Kathleen Valley
announced. the first 12 months of sustaining capital. resource to ensure that we extract the best
While most developers aim for a debt- Ottaviano said the raising had not only value for our shareholders,” Ottaviano said.
heavy, equity-lite financing mix to ease the covered capital costs but changed financ- Not only has the equity raising given Li-
immediate burden on existing sharehold- ing dynamics for the project. ontown the upper hand in financing and
ers, Liontown’s decision has longer-term “The banks realised that Liontown now offtake negotiations, it has also increased
consequences, according to Ottaviano. had enough to fund development alone, its credibility with EPC/EPCM contractors.
“Even though the traditional banks are far so they came back with revised terms,” he “We are in such an incredible market for
more comfortable with the lithium market – said. “That has had a knock-on effect with mining projects that contractors can say
particularly as they are looking to diversify customers who see that we’ve got major they don’t want to bid for your project if there
away from fossil fuels – they do have sev- funding locked in and don’t need offtake is any doubt surrounding it but now that we
eral second-order conditions which prove terms for debt finance so we can now ne- have the money in, we are getting interest
quite onerous to developers,” Ottaviano gotiate.” from contractors,” Ottaviano said.
said. “When potential customers know you Four weeks after Ottaviano’s comments, “With that one decision we’ve put the
can’t lock away debt without meeting con- the company announced a binding offtake company in a very strong position to extract
ditions around offtake, suddenly they have agreement with Korean company LG En- the best conditions in offtake, debt and con-
the upper hand in negotiations.” ergy Solution. The contract will see LG struction.”
To disrupt this imbalance, Liontown – led buy 100,000 dmt in the first 12 months and At the heart of Liontown’s financing suc-
by evergreen chairman Tim Goyder – de- 150,000 dmtpa in four subsequent years cess is the quality of its flagship asset and a
cided to “go hard” on the equity side of the with an option to extend for a further five vibrant lithium market.
ledger for development of its Kathleen Val- years, representing over 30% of Kathleen With a reserve of 68.5mt @ 1.34% Li2O
ley lithium project near Leinster in Western Valley’s annual production. and a resource of 156mt @ 1.4% Li2O,
Australia. Pricing for the contract will be determined Kathleen Valley has both scale and grade.
The strategy was met with immediate by a formula-based mechanism linked to Coupled with a buoyant lithium market, the
support in the market. When announced on market prices for lithium hydroxide. At cur- project is one of the most valuable hard
December 1, the $450 million placement rent pricing, the contract terms would trans- rock development assets on the burgeon-

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