Return bid to deliver $989m windfall for Liontown chairman Tim Goyder
Consolidation of Australia’s lithium sector has kicked back into gear with Liontown set to accept Albemarle’s $6.6bn offer and Mineral Resources likely to buy the Bald Hill mine.
Consolidation of Australia’s lithium sector has kicked back into gear as Liontown Resources signalled it will accept Albemarle’s $3 a share offer and Mineral Resources emerged as the likely buyer of the Bald Hill lithium mine.
Liontown said on Monday its board is likely to recommend that shareholders accept Albemarle’s improved $6.6bn offer for the company if the global lithium giant returns with a binding bid, saying it had opened its books to Albemarle for “limited” due diligence.
Albemarle put a limit on its interest in Liontown in its latest offer, saying the $3 a share on offer is its “best and final” in the absence of a rival bid.
The Liontown board, led by chairman Tim Goyder – who will receive a $989m cheque for his 15 per cent of the company if the offer succeeds – indicated it will accept Albemarle’s improved bid if it is turned into a binding takeover proposal.
“The intention of the Liontown board is to unanimously recommend shareholders vote in favour of the proposal in the absence of a superior proposal,” the company said in a statement.
Liontown did not say how long it had opened its books to Albemarle, and The Australian understands the details of the exclusivity agreement are yet to be finalised.
The return offer is a 50c a share improvement – or 20 per cent – on Albemarle’s March takeover move on Liontown, and comes immediately after the lithium hopeful was added to the S&P/ASX100 index – which often triggers a surge in buying of a company’s shares as index funds balance their portfolio.
It is a 36 per cent premium to Albemarle’s initial $2.20 offer in October 2022 – an additional $1.8bn on the company’s valuation, and a 97 per cent improvement on Liontown’s share price the last trading day prior to disclosure of Albemarle’s offers on 28 March 2023 – or $3.2bn in market value.
Liontown is also yet to release its annual financial report for last financial year, which would have been closely scrutinised by investors for signs of any further blowouts at the company’s Kathleen Valley lithium project.
A successful takeover by Albemarle could also link Liontown’s second lithium project, Buldania, back into the global giant’s successful partnership with Mineral Resources.
MinRes is understood to have cut a deal for the Bald Hill lithium operation with the administrators of the company, which collapsed in 2019 as lithium prices crumbled.
“MinRes’ successful acquisition of the Bald Hill mine will ensure that the mine is being operated by an experienced Australian ASX listed lithium miner, and any profits are generated and taxes and royalties paid in Australia to the benefit of Australian taxpayers,” the company said in a statement after market close on Monday.
Successive deals to buy the mine from administration have fallen through, with China-linked but Nevada-registered Austroid barred from buying the mine in June by Treasurer Jim Chalmers, on the recommendation of the Foreign Investment Review Board.
Glencore and Sagex Capital have also been linked with an offer for the mine, but The Australian revealed last week that MinRes was in the box seat to buy the operation out of administration.
MinRes said the mine must remain in Australian hands.
“If the Treasurer’s decision-making power under the Foreign Acquisitions and Takeovers Act has been circumvented, and there is a risk the mine remains in the effective control of foreign entities whose proposed acquisition has been rejected by FIRB, MinRes believes the Australian Government should use their powers under FATA to intervene,” it said on Monday.
No figure has yet been given for a MinRes deal, but sources say it is well below the $1bn that has been speculated in the market.
Bald Hill is likely to become the centrepiece of MinRes’ WA expansion plans, making sense of the company’s move to buy up significant stakes in a group of other lithium hopefuls around the Kalgoorlie region.
After delivering the company’s annual financial results last week, managing director Chris Ellison was questioned by analysts on the company’s move to buy a 17.5 per cent stake in Delta Lithium – along with its position in Essential Metals and Global Lithium.
Bald Hill’s mine and processing plant sits in the same district as the MinRes Mt Marion lithium hub, and smaller deposits controlled by many of the companies in which MinRes has bought a stake – as well as Liontown’s Buldania deposit, under offer from Albemarle, a long-term partner for MinRes.
“We have got a strategy on what we’re doing with the land down around that whole region round Mt Marion, I can’t really share it at the moment because if I do, I’m just sharing it with our competitors, and they’re going to try and copy me. But I promise that within the next couple of weeks, we’ll be able to shine a light on it,” Mr Ellison said last week.
Bald Hill’s proximity to both rail lines and other deposits could easily make the operation’s plant and processing infrastructure a second mining and processing hub for MinRes, or a third party tolling option for smaller companies with deposits in the region as it looks to consolidate its position of one of the world’s top-tier lithium producers.
MinRes shares rose 2.4 per cent to $73.90 while Liontown shares surged on the improved bid by Albemarle, closing up 8.8 per cent to $2.85.
More Coverage
