Liontown unveils A$1.13bn funding plans

PERTH (miningweekly.com) – Lithium developer Liontown Resources has announced a A$1.13-billion capital plan to fund the development of its Kathleen Valley project, in Western Australia, after critical minerals company Albemarle this week withdrew a A$6.6-billion takeover offer.

The company on Thursday announced that it had signed a commitment letter and credit approved term sheet with a syndicate of banks and government credit agencies for a A$760-million debt funding package.

The debt facilities will replace the existing A$300-million debt facility with Ford and will include an Export Credit Agency facility with a ten-year term, a commercial lender and the Clean Energy Finance Corporation facility with a seven-year term, and a cost overrun facility which will be replaced by a revolving working capital facility on the completion of the project.

Liontown told shareholders that the commercial terms of the debt facilities were competitive and economical, including an attractive margin across the debt facilities above the bank swap bid rate.

“The execution of this credit approved term sheet and the launch of the equity raise are critical achievements in de-risking the development of the Kathleen Valley project. These initiatives ensure we are funded to first production and beyond,” said Liontown MD and CEO Tony Ottaviano.

"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.”

Additionally, Liontown will also undertake a A$376-million equity raise, comprising a fully underwritten institutional placement to raise an initial A$365-million, and a non-underwritten conditional placement to shareholder Timothy Goyder, for six-million shares, raising a further A$10.8-million.

Furthermore, Liontown will also undertake a non-underwritten share purchase plan (SPP) to raise a further A$45-million.

The equity raise will be priced at A$1.80 a share, and will consist of 209-million new shares. Some 203-million new shares under the institutional placement will be issued under the company’s existing placement capacity.

The issue price of A$1.80 a share represents a 25.5% discount to Liontown’s last closing price of A$2.79 a share.

The SPP, meanwhile, will be conducted at the lower of the placement price of A$1.80 a share, or a 2% discount to the five day volume weighted average price of Liontown shares up to and including the closing date of the SPP.

The SPP will open on October 30 and close on November 20.

“We remain confident in our ability to execute the plan for Kathleen Valley on schedule and on budget, and as part of our financing strategy we have ensured an appropriate financial buffer is in place to allow the company to successfully weather any unforeseen issues that may arise,” said Ottaviano.

The 2.5-million-tonne-a-year Kathleen Valley operation will produce 500 000 t/y of spodumene concentrate, and in year six of operations, Liontown will look to increase the project capacity to 4-million tonnes a year, delivering 700 000 t/y of spodumene concentrate, within six years.

Based on this production scenario, the Kathleen Valley operation is expected to have a mine life of 23 years and will generate life-of-mine free cash flows of A$12.2-billion.