Gina Rinehart’s Hancock Prospecting had upped its stake in Liontown Resources to a strategic 12.4 per cent ahead of Albemarle’s $6.6 billion takeover.
Hancock increased its holding in the lithium miner by an additional $108.8 million, bringing its ownership to 12.39 per cent.
What this means for the tabled $6.6 billion takeover deal with Albemarle is unclear. Now that
Hancock surpassing the 11 per cent threshold complicates things for Albemarle, as 90 per cent ownership is the benchmark entitling a stakeholder to compulsorily acquire the remainder of shares.
However, Hancock has previously indicated its intention to work alongside other Liontown shareholders, like Albemarle, in steering the company’s future. Including potentially seeking a position on Liontown’s board.
Hancock also expressed an interest in exploring potential investment opportunities with shareholders for downstream lithium processing in WA.
The only thing that can be said for certain is that Hancock has bought its say in the future of Liontown.
Risky business?
Hancock has doubled down on its cautious assessment of Liontown, focusing on the lithium miner’s recent $56 million increase in capital cost.
“Factoring in inflation over time, the actual capital cost could be in excess of $1 billion (from $951 million),” Hancock said.
“The latest capital cost estimate includes rates and quantities for awarded contracts. However, Hancock notes that the productivity, design, quantity and schedule risks largely remain with Liontown.”
The private company also noted Liontown’s decision to freeze a recent direct shipping ore (DSO) strategy due to declining lithium prices.
Liontown is today trading just shy of the $3 per share margin, which is Albemarle’s offer price.
The Albemarle deal has been unanimously recommended by Liontown’s board but is yet to be voted on by shareholders.
