LTR got a pretty crap deal. Less funding and banks wont touch them with a 10 foot pole.
Going into debt in these fragile Li price periods to come is pretty dubious.
LTR is one production hiccup away from being cashflow negative once production starts imho
Liontown Resources has switched out $550 million worth of bank and government debt for a $379 million funding deal with battery maker and offtake partner LG Energy, just weeks out from its Kathleen Valley project producing its first lithium.
Explaining the decision to secure new funding arrangements for its flagship, Liontown boss Tony Ottaviano said LG offered more competitive interest rates and a flexibility that “really stood out” to the Tim Goyder-led board.
“We thank the banks . . . for their support but this was a superior funding proposal,” Mr Ottaviano told analysts.
It means Liontown will back out of a $550m debt syndicate pulled together in March with Commonwealth Bank, National Australia Bank, France’s Societe Generale and taxpayer-funded agency, Export Finance Australia.The debts announced in March were to ensure Liontown was funded through first production and ramp-up, but the explorer also said it would keep hunting for a “longer-term” funding solution.Liontown had been due to provide its partnered banks with an updated mine plan and lithium price forecasts — tipped to stay in the doldrums for the foreseeable future — to show it could support a long-term financing package by the end of July.
Instead, the lithium developer will get the funding it needs ramp up production at its Kathleen Valley flagship via a convertible notes arrangement with South Korean company LG.
Under the new “strategic partnership”, they will also add another 10 years to their existing lithium offtake arrangement.
Investors seemingly welcomed the new funding arrangement. Liontown shares were up more than 14 per cent during afternoon trade to reach $1, and closed the day up 7.3 per cent to 96¢.
Liontown said the new deal with LG would provide “less restrictive covenants” than it would be held to under fresh debt with commercial banks. Mr Ottaviano had told a Macquarie conference in May that banks were on a “learning curve” when it came to banking lithium projects.
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