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Monsters of Rock: Liontown raising $490m to set Kathleen Valley on path to lithium production
Mining
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Booming lithium stock Liontown Resources (ASX:LTR) is building the financial muscle to back its Kathleen Valley lithium mine in WA, tapping the market for up to $490 million in a placement and share purchase plan.
Only last month Tim Goyder-chaired Liontown put the hard numbers around the northern Goldfields development, a $473 million mine that promises to produce upwards of 500,000tpa, with production starting in 2024.
While it suffered a hit to its shares immediately after the release of the DFS and a separate study on a downstream lithium hydroxide facility to be built later this decade, investors are backing Liontown’s plans.
They will do so to the tune of $450 million in a fully underwritten $1.65 a share institutional placement announced today, which along with a $40 million SPP for existing shareholders will cover the equity component of the project.
The raising should firm up the market’s confidence Liontown will have funding certainty to be able to deliver the project of its own accord.
It will have $474 million in the bank before proceeds of the SPP flow in, with the company aiming to tie up $81-121 million of additional debt funding to complete the initial 2.5Mtpa stage 1 development.
A final investment decision is expected in the June quarter of 2022, with Liontown to use cash from the raising announced today to fund early works and provide balance sheet strength ahead of offtake discussions.
“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,” Liontown MD Tony Ottaviano said.
“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 WA mining industry.”
Liontown Resources share price today:
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South32 (ASX:S32), AngloGold Ashanti (ASX:AGG), Rio Tinto (ASX:RIO), FMG (ASX:FMG) and BHP (ASX:BHP) were all among the top performing large caps.
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