Ann: Kathleen Valley Project Update, page-81

So we nowknow Hancock Prospecting(HP) has 12.36% and is most likely still buying. Their plan obviously is not to counter the ALB Scheme, as they would not be otherwise buying shares that cannot be voted. HP will clearly vote down the Scheme if it ever comes to that.

They obviously like LTR and its assets as well as the current situation for LTR otherwise they would not be buying LTR shares with such vigour. Their internal valuation is probably similar to ours.

Today’sannouncement (https://www.hancockprospecting.com.au/hancock-increases-its-strategic-stake-in-liontown-to-12-4/) basically criticises our management of the project and casts doubt abouttheir credentials. It further states the obvious, that shareholders will be funding the additional costs now incurred. Whether that is fair or not, it is clearly being done with a purpose to aid in their further acquisition of shares and get the LTHs to sell to HP.

What is the end game?

Maybe HP will attempt to buy only up to 19.99%, but I am thinking that there may be limits to how many LTHs will sell at the current price. Then there’s also the short sellers who need to get their shorts under control, so there could well be strong competition for whatever shares are shaken out. They will know from the process to date how easy or hard it is likely to be to gain an increased holding.

But on balance I cannot see this stopping at 19.99% unless they are experiencing serious resistance. Because they keep restating their maximum price of $3.00, that is sending a message.

I believe it is HP’s intention to make an “off market” bid at $3.00 + or a minor premium to their recent acquisitions once they reach 19.99%. At that time HP is likely to state that they are bettering the Scheme offer of ALB plus a premium, but doing shareholders a favour of offering the money straight away (and with no minimum acceptance condition).

This is a similar strategy that HP took with the Warrego Energy takeover late 2022 and early 2023 (I was a shareholder)….Here is an excerpt from their first offer in that battle…

“The takeover offer is subject to a "Pre-Emptive Rights Condition", which requires the Warrego Board to recommend in its Target's Statement or any supplementary Target's Statement that Warrego shareholders accept the Hancock Takeover Offer in the absence of a superior proposal, and a "No Prescribed Occurrences Condition”. The Hancock Takeover Offer is not subject to any minimum acceptance condition.”

Here is the actual Warrego announcement….

https://announcements.asx.com.au/asxpdf/20221201/pdf/45j9wlsmsggtg1.pdf

Here is the Hancock Biddersstatement which outlines the terms of their off market offer. There were many more steps in the process (bidding war) and I will follow up with more information. See page 5 of Hancock’s letter to get a feel for their types of threats and rhetoric we can expect.

https://announcements.asx.com.au/asxpdf/20221130/pdf/45j86l93psy99f.pdf

It seems likely to me that they willwant the Board recommendation but I doubt it will be given. Nevertheless HPseems likely to proceed, and then perhaps raise their offer slightly againtrying to get the BoD to roll over. Who knows what will happen but the BoD maystruggle to rationalise not recommending an offer equal to the previous onethey seriously contemplated recommending.

If HP struggles to get many shares,they may then continue to gradually increase the offer by small increments untilthey reach the %holding level they deem enough. Who knows how much that is, but they would be aware of resistance from LTHs and probably the BoD. I previously speculated that any entrant may want around 30+% which would give them effective control. They may well look to go all the way to 100%, but I think there would be strong resistance unless the bid was increased by a lot.

I sincerely hope that my analysisdoes not prove accurate as I want us to remain independent and for HP to workwith our BoD, but if HP really wants 100% (or even say 35%) they will work thisuntil they get it. : (

Will there be a bidding war? ALB may well respond, but if they bid the same price on different terms then maybe they will not be able to. Our BoD though may well be able tochange their mind and GIVEN A CONTEST, they could just remove their support forany bid. That’s what I want to happen.

Fellow shareholders….Please braceyourselves for an ugly battle for our shares…try not to be swayed by the sweet talkor dirty talk from any party….as always IGNORE THE NOISE AND SIT ON YOUR HANDS!

They want our shares!

Regards

DF