Liontown roars back with successful $365 million institutional placement
After a dramatic week, leading Australian lithium developer Liontown Resources (ASX: LTR) has wrapped up a major financing milestone with the successful completion of an approximately $365 million institutional placement.
The new capital raising will support the company’s development of its world-class Kathleen Valley lithium project in Western Australia and comes just days after Liontown revealed that a proposed $6.6 billion takeover by global mining giant Albemarle was withdrawn and the completion of a $760 million debt facility.
To support the $365 million institutional placement and debt facility, Liontown has also revealed it is undertaking a share purchase plan (SPP) to raise up to $45 million and that an additional $10.8 million will be raised via a non-underwritten conditional placement to billionaire mining entrepreneur and Liontown chairman, Timothy Goyder.
Strong local and global interest
Managing director and chief executive officer, Tony Ottaviano, said Liontown had received strong demand from domestic and offshore institutions providing further endorsement of the Kathleen Valley project for the placement.
“The completion of the institutional placement completes the funding package to take Kathleen Valley through to first production and beyond,” he said.
“Notwithstanding the current challenging market conditions, the placement was met with strong demand and we have achieved our goal of strengthening our share register with the addition of high-quality domestic and international institutional shareholders.
“I am immensely proud that this funding has attracted such positive domestic and international investment and equity market support which, in turn, demonstrates a strong vote of confidence in the Kathleen Valley Project and the Liontown team.
“We look forward to getting on with the task of delivering Kathleen Valley on time and on budget with the certainty this funding provides.”
Ford debt to be refinanced
Proceeds from the equity raising will be used towards refinancing an existing Ford debt, completing construction and ramp up of the project and fully funding Liontown to first production and beyond.
The Ford debt relates to a June 2022 arrangement where a Ford subsidiary agreed to provide a $300 million debt facility to Liontown.
At the same time Liontown executed a binding offtake agreement with the leading global automaker company.
$760m debt facility insights
The successful closing of the institutional placement comes just one day after Liontown signed a commitment letter and credit approved term sheet with a syndicate of leading international and domestic commercial banks and government credit agencies for the $760 million debt funding package,
The debt funding includes long duration project finance facilities with an optional cost overrun and working capital facility.
Mr Ottaviano said the execution of this credit approved term sheet has helped de-risk the development of the Kathleen Valley project.
“We have assembled a syndicate of lenders that can only be described as high calibre and, following a comprehensive and independent technical review, this syndicate has committed significant funding support to completing our world class Kathleen Valley Project.”
“The significant involvement of both Export Finance Australia and the Clean Energy Finance Corporation is another big endorsement for the project and speaks to its global importance. The potential remains for other international export credit agencies that have expressed their joint interest to join the lending syndicate to do so in the future.”
Kathleen Valley remains on track to commence production in mid-2024.
The project has a current mineral resource estimate of 156 million tonnes at 1.4% lithium oxide and 130ppm tantalum, with over 80% of the resource being classified as measured and indicated.