Liontown Resources (ASX: LTR) has completed a successful ~$450 million institutional placement as it looks to power development at its Tier-1 Kathleen Valley Lithium Project in Western Australia.
The placement saw approximately 272.7 million new fully paid ordinary shares issued to new and existing investors at $1.65 per share, and was strongly supported by local and overseas institutions seeking exposure to the critical battery minerals market.
In parallel, Liontown has announced a share purchase plan, commencing 10 December 2021, which will be priced identically to the placement and is expected to raise an additional $40 million.
“The introduction of these high-quality institutions together with the support shown by current shareholders has ensured that we emerge well capitalised”
Speaking on the development, Liontown Managing Director and CEO Tony Ottaviano said: “The strong demand from both domestic and offshore institutions for this landmark equity raising is testament to the world-class nature of the Kathleen Valley Project and represents a strong endorsement of our development pathway.”
“The Placement was well supported by existing Liontown shareholders and will also see new investors join the register. The introduction of these high-quality institutions together with the support shown by current shareholders has ensured that we emerge well capitalised with certainty of funding for the Stage 1 capital cost of the initial 2.5 Mtpa development at Kathleen Valley.”
Upon completion, Liontown is expected to hold cash reserves of approximately $474 million before costs and receipt of SPP proceeds, which it will use to accelerate development of its world-class Kathleen Valley Project. This will include ordering of critical long-lead items, mine establishment and construction capex, pre-production costs, sustaining capex for the first year of operations, corporate costs, working capital and further costs associated with the offer.
Additional funding will be set aside for resource drilling at Kathleen Valley and Buldania plus further exploration, studies and testwork.
Kathleen Valley, situated within Western Australia’s north-eastern Goldfields district, is described by Liontown as a ‘world-class’ lithium deposit and holds an existing mineral resource estimate of 156Mt @ 1.4% Li2O and 130ppm Ta2O5.
A recently-completed definitive feasibility study returned ‘exceptional’ economics including a post-tax net present value of $4.2 billion and an internal rate of return of 57%.
The project’s current resource base is large enough to sustain a 23 year life of mine, which is expected to grow with further exploration work.
A rise in electric vehicle production is expected to result in significant lithium deficits from around 2024, which lines up with expected commencement of production at the project.
Settlement of the placement is expected to occur on 6 December 2021, with new shares to be allotted the following day.