Chris Ellison and Gina Rinehart tip in $15 million as Delta...

Chris Ellison and Gina Rinehart tip in $15 million as Delta Lithium rattles tin for $70m

Sean SmithThe West Australian

Mon, 13 November 2023 10:45AM

Delta Lithium is raising $70.2 million in fresh equity but will hold back on a development decision at its flagship Mt Ida project in the Goldfields until late 2024.

New chairman Chris Ellison’s Mineral Resources and Gina Rinehart’s Hancock Prospecting will tip in $15.4m to the two-for-seven rights offer at a discounted 46¢ a share, taking up their full combined entitlement of 22 per cent.

Delta said the proceeds would be used to advance Mt Ida and the Yinnetharra project in the Gascoyne, including fully funding the former to a final investment decision “expected in late 2024”.

That’s a change from the company’s previously stated ambitions under former executive chairman David Flanagan to potentially start up Mt Ida as a direct shipping operation from as early as next month.

MinRes took board control of Delta in a surprise shake-up two months ago that saw Mr Ellison catapulted into the chair and the sudden departure of Mr Flanagan.

A month earlier, MinRes had emerged as Delta’s biggest shareholder, joining Hancock on the register with 17.4 per cent after a share market raid.

Monday’s announcement confirms Hancock’s holding in the company at 4.6 per cent.

MinRes is also underwriting the raising, providing the group the opportunity to creep up the share register by taking up any unwanted stock.

Delta said the proceeds from the rights issue would drive its plan to “rapidly advance” Mt Ida while significantly expanding exploration at Yinnetharra.

The group is one of the various lithium plays afoot by Ms Ellison and Mrs Rinehart, who have taken equity stakes in a range of WA companies as they position to play a major role in shaping the development of the next stage of the State’s battery metals sector.

The rights issue is a cheap one for the duo, struck at an 11.5 per cent discount to Friday’s closing price and 17 per cent below Delta’s five-day volume-weighted average price.

The stock was trading at 93¢ in early August.

Among Delta’s other major shareholders, Japanese group Idemitsu has 14.6 per cent and Canada-based Waratah Capital 13.6 per cent.

Asset manager Waratah Capital has a history of shareholder activism and earlier this month increased its holding in Delta from 12.5 per cent.

The West Australian understands Waratah will not increase its holding via the entitlement offer due to recent on-market buying, but is supportive of Delta’s development plans and MinRes’ underwriting position.

Idemitsu is also understood to have declined to participate in the capital raising. In June, it outlaid $46.4 million to lift its stake in Delta to 15 per cent.

MinRes currently has two representatives on the Delta board - with Mr Ellison joined by MinRes lithium chief executive Joshua Thurlow as a non-executive director.

Both Mr Ellison and Mr Thurlow will be up for election at Delta’s annual general meeting on November 29.