Rich Listers pile into lithium IPO that closed in 20 minutes

Rich Listers pile into lithium IPO that closed in 20 minutes (The A.F.R.)

Brad Thompson Reporter Jan 5, 2024

Mineral Resources managing director Chris Ellison has emerged as a big shareholder in lithium hopeful Kali Metals, after an extraordinary initial public offering that opened and closed in less than 20 minutes and was massively oversubscribed.

Kali is due to start trading on the ASX on Monday. Its backers include another West Australian billionaire, former MinRes director Tim Roberts, and Navitas education company co-founder Rod Jones.

They will be hoping Kali can mirror the success of lithium hopefuls Azure Minerals and Wildcat Resources, which saw their valuations skyrocket last year as the likes of Gina Rinehart, MinRes, New York-listed Albemarle and Chile’s Sociedad Quimica y Minera engaged in a multi-billion dollar tug-of-war over assets in WA.

The interest in Kali shows some investors remain confident about the long-term future of lithium despite spodumene concentrate prices plunging to near $US950 a tonne, down from about $US8000 a tonne last January. That price fall has cast doubt over the immediate future of producers like Core Lithium, which on Friday said it would pause mining at Grants Open Pit at its Finniss operation first opened in 2022.

Kali holds vast tracts of ground in a lithium hotspot around Kalgoorlie and Norseman, where MinRes owns and operates the Mt Marion and Bald Hill mines.

It also has exploration ground near lithium mines and projects in the Pilbara, including a joint venture with SQM. The Chilean giant is aiming to establish a big presence in the Pilbara after joining forces with Mrs Rinehart in a $1.7 billion bid for Azure.

Other big names on the Kali list of top 20 shareholders include Mutual Trust, the family office for the Myer and Baillieu families.

Mr Ellison piled into Kali through his private company Wabelo, emerging with a 4.86 per cent stake.

He is the third-biggest shareholder behind Kalamazoo Resources (22.1 per cent) and Karora Resources (20.2 per cent), which combined to spin out Kali.

Mr Roberts is a director of Warburton Pty Ltd, the fourth-biggest shareholder in Kali with 2.8 per cent. The son of the late Multiplex founder John Roberts is a friend of Mr Ellison and sat on the MinRes board until he resigned in 2019.

Mr Jones – who after co-founding and leading Navitas became part of a consortium led by private equity firm BGH Capital, which acquired the business for $2.1 billion in 2019 – has a 2.4 per cent stake through his private company Carjay Investments.

Kali raised $15 million in November through the issue of shares at 25¢ apiece, with Bell Potter and Canaccord as joint lead managers.

Kali managing director Graeme Sloan said the company could have raised up to four times that amount in the IPO, which “opened and closed within a matter of minutes”.

“Each of our WA projects is within a bull’s roar of existing lithium mines and advanced lithium projects, and that sparked a lot of interest,” he said. “We took the view that $15 million was enough to fund two years of really solid exploration.”

Consolidating assets

Most of that $15 million is earmarked for an area known as Higginsville, where Kali has about 1500 square kilometres of exploration ground surrounded by the MinRes-operated Mt Marion and Bald Hill operations and projects owned by MinRes-backed lithium juniors.

Under a joint venture deal, SQM can gain a 70 per cent stake in two of Kali’s three projects in the Pilbara by spending $12 million over four years to support exploration work.

MinRes has yet to declare what it intends to do with its 13.5 per cent stake in Azure now that Mrs Rinehart’s Hancock Prospecting and SQM have agreed to work together on a $1.7 billion takeover bid.

However, MinRes is keen to consolidate lithium assets in the Goldfields-Yilgarn region, which is home to Mt Marion and Bald Hill.

Mr Ellison told The Australian Financial Review he was attracted to Kali by the potential of its Goldfields land package and is supportive of the existing management team.

“I think the Goldfields is the most prospective ground on the planet for lithium and WA is supportive on approvals through to production,” he said.

“I’m passionate about the future of lithium being the fast track to emissions reduction, and the Kali ground is adjacent to some great country.”

As well as its ground in WA, Kali has lithium projects in what is known as the Lachlan Fold Belt in NSW and Victoria.