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We’d all assumed no one would be bullish enough to go over $3 on Liontown Resources (ASX:LTR), but Albemarle may be pressured to throw some sugar on its latest bid for the Australian lithium developer despite declaring its offer on Sunday as best and final.
That is if no rival offer emerges.
The Albemarle deal, which Liontown’s board plans to accept should it become binding after due diligence, values Liontown at $6.6 billion – almost twice as high as its trading range before the US lithium chemical giant lobbed a rejected offer of $2.50 per share in March. After an initial kick on Monday, Liontown’s shares had plateaued with the market appearing to accept the Albemarle takeover was as good as it gets.
Not so now, with a massive trading day of around 93 million shares suggesting a big player is building its stake ahead of a planned block or potential rival offer.
The Australian’s Dataroom column fingered Gina Rinehart’s Hancock Prospecting as the likely main bidder with one of her common brokers Euroz Hartleys believed to be on the trade. The aggressive buying pushed Liontown shares up 9% to $3.02, meaning some sellers are already obtaining the price of the Albemarle offer.
It shows the battle is not yet won for Albemarle, which is desperate for long-dated resources to boost its processing operations in Australia. It has already commissioned a doubling of its Kemerton lithium hydroxide plant in WA’s South West, which will be fed from its 49% share in the Greenbushes mine down the road, the world’s largest spodumene producing operation.
The construction of the $895 million Kathleen Valley is most of the way there, with the 500,000tpa spod mine (550,000t according to presentations from Albemarle), the world’s first underground lithium operation, expected to be producing concentrate from mid-2024.
It could ramp up to 700,000tpa of SC6 lithium concentrate in a second stage.
But there has been an absolute smorgasbord of lithium M & A in recent times as global giants vie for supremacy in the battle to supply the electric vehicle revolution.
Allkem (ASX:AKE) plans to create the world’s third biggest lithium producer via a $16 billion merger with America’s Livent, while SQM is chasing all of Azure Minerals (ASX:AZS) after the billion-dollar-plus junior made the massive Andover discovery near Roebourne in WA’s Pilbara.
Chris Ellison’s MinRes (ASX:MIN) has stakes in regional players Delta Lithium (ASX
LI), Global Lithium Resources (ASX:GL1) and Develop Global (ASX
VP) in the Goldfields and could emerge as the king in a consolidation of that region’s lithium industry after being revealed as the likely winner of the battle for the operating Bald Hill lithium mine this week.
Rinehart, meanwhile, is exploring for lithium in a farm-in with ASX minnows Legacy Iron Ore (ASX:LCY) and Hawthorn Resources (ASX:HAW) in a bid to supply India’s future lithium needs.
Laters..
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