Liontown Resources’ share burst sparks questions over blocking stake

Danielle Le MessurierThe West Australian

Thu, 7 September 2023 5:39PM

Liontown Resources chairman Tim Goyder. Credit: Daniel Wilkins/The West Australian

Australia’s richest person Gina Rinehart is understood to be behind a $300 million share raid on WA lithium company and takeover target Liontown Resources.

Mrs Rinehart’s Hancock Prospecting is believed to have spent Thursday building a blocking stake in Liontown just days after the company received a $6.6 billion takeover offer from US battery chemicals giant Albemarle.

The $3-a-share bid, revealed on Monday, was enough for Liontown to open its books to Albemarle to allow the group to return with a binding offer.

The Tim-Goyder chaired company signalled its board would back the increased offer in the absence of a better counter offer.

The takeover could be made more difficult if Hancock emerges with 10 per cent or more of Liontown, as a holding of that size would prevent Albemarle from taking the company private.

It is understood Hancock had a 4.9 per cent stake in Liontown before Thursday, just below the threshold to be considered a substantial shareholder.

The turnover in shares represented about 4.5 per cent of Liontown’s issued capital.

It is understood the block trade was completed through Perth stockbroker Euroz Hartleys, which has been used previously by Hancock, and priced around $3 a share.

Mrs Rinehart has been steadily growing Hancock’s interests in the battery metals space, as have many others including fellow iron ore miner Mineral Resources, led by Chris Ellison.

However, the Liontown share buying spree would represent her most significant investment in lithium to-date.

One analyst speculated Mrs Rinehart may have been eager to put her foot on a large-scale asset, given there are few lithium resources of the size of Liontown’s Kathleen Valley project in WA.

The project near Leinster is expected to come online mid next year and supply about 500,000 tonnes of spodumene concentrate each year to global markets.

It already has offtake agreements with South Korea-based LG Energy Solution and electric car manufacturers Tesla and Ford.

Hancock in June struck a joint venture earn-in deal with Indian miner NMDC to look for lithium and other critical minerals in WA’s Central Yilgarn.

The deal will see Hancock spend up to $26m to earn a 51 per cent stake in a new exploration joint venture at Mt Bevan, 250km north of Kalgoorlie-Boulder, from Hawthorn Resources and the NMDC-backed Legacy Iron Ore.

Hancock is also believed to have a stake in WA explorer Delta Lithium of between 4 and 5 per cent.

Liontown shares soared on the buying spree and surpassed Albemarle’s bid price to close over 9 per cent higher at $3.02, valuing the company around $6.65 billion.

Mr Goyder has a 15 per cent stake in Liontown and boasts a loyal following among the big retail base in the company’s 31,000-strong share register.

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