Liontown Resources’ chairman says the company is ‘comfortable’ with the failed Albemarle takeover
Liontown shares have plunged since Gina Rinehart spoiled Albemarle’s $6.6bn takeover bid but chairman Tim Goyder says the company can go it alone.
Liontown Resources is “entirely comfortable” with developing its Kathleen Valley lithium project on its own, after the failure of a $3-a-share bid from lithium major Albemarle in October, chairman Tim Goyder says.
Albemarle walked away from its year-long chase of Liontown after Gina Rinehart’s Hancock Prospecting bought up a 19.9 per cent stake in the emerging lithium miner – enough to block Albemarle’s friendly bid for the company.
Since then the Liontown share price has since plunged, closing at $1.375 a share on Thursday – up 3c for the day – as the company tries to keep budget and timing blowouts at the underground mine under control.
But Mr Goyder told shareholders at Liontown’s annual meeting on Thursday the company was comfortable with the idea of developing Kathleen Valley on its own, having locked in debt and equity funding for the underground lithium mine.
“We had every intention of endorsing the binding proposal once it was presented. We were prepared to work with Albemarle to secure shareholder approval for the proposed scheme of arrangement. At $3 per share, it was well above the previous offers,” he said.
“It represented a 97 per cent premium to Liontown’s share price prior to the disclosure date of their earlier offers in March.”
Albemarle cited the “growing complexities” of closing the deal as its reason for walking away.
“So now here we are, looking at an independent future once more. A position we are entirely comfortable with,” Mr Goyder said.
“We had done all the preparation for the debt and equity package and were able to execute promptly following Albemarle’s withdrawal. With funding locked in, we are in a position to complete the construction of the Kathleen Valley project.”
The company has added former Fortescue Metals Group chief financial officer Ian Wells to its board, replacing retiring director Anthony Cipriano from January 1.
Mr Wells served as Fortescue’s CFO for five years until quitting the company in January as part of a wave of senior executive departures that have plagued that mining giant this year.
Mr Goyder told Liontown shareholders the company was not concerned about the recent fall in lithium prices, saying the company believed the falls were the result of a destocking cycle at Chinese lithium refiners.
“During financial year 2023, the price of spodumene concentrate averaged a very healthy $US6482 per tonne,” he said.
“It finished the period at a 12-month low of $US3,750 US a tonne. Since then, it has fallen further to around $US1590 a tonne.
“With an expected 10-year average C1 cash cost at Kathleen Valley of $651 per tonne, or roughly $US475 per tonne, it still provides a healthy margin.
“What we’ve all got to remember is that the lithium market is in its early stages. Short-term price fluctuations are inevitable and can be influenced by multiple factors.”