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Liontown Soars 68% on a Take-Over Bid

28 March 2023 17:15

Australian lithium giant Liontown Resources have received an unsolicited, conditional and non-binding indicative proposal from the Albemarle Corporation at a price of $2.50 per share, with the board unanimously deciding to reject the proposal having determined it seriously undervalues the worth of the Company’s flagship 156Mt @ 1.4% Li2O Kathleen Valley Lithium Project and its expanded portfolio.

Liontown’s board believes that Albemarle’s proposal doesn’t adequately reflect the significant work undertaken at Kathleen Valley in the past few months. After blasting at the Mt Mann pit kicked off in February, the Project is now on track to deliver its first production mid-next year, supplying an estimated 500 thousand tonnes of lithium oxide concentrate at a grade of 6 per cent Li2O.

Alongside work at Kathleen Valley, Liontown also believes that the offer doesn’t take into account the considerable growth potential at both Kathleen Valley and the Company’s broader portfolio including the estimated 15mt of 1.0% lithium oxide Buldania Project.

The explorer also noted the opportunistic qualities of Albemarle’s proposal coinciding with recent softness in companies exposed to the lithium sector despite a positive long-term outlook for lithium producers, with Albemarles’s subsidiary RT lithium slowly building a stake in Liontown through on-market purchases.

It seems that investors agree that Albemarle is undervaluing Kathleen Vally, with Liontowns share price jumping 65.57 per cent today to trade at $2.57 (2:01 pm UTC+ 8 hours), the highest the company’s share price has ever been.

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(LTR’s share price is accurate as of 2:01 pm UTC+ 8 hours)

This isn’t the first time Liontown has rejected Albemarle’s attempts to grow its Australian Holdings, as the Company rejected similar non-binding offers twice in the past six months, for $2.35 per share on the 3rd of March and at $2.20 per share on the 20th of October, indicating continued international interest in Australian lithium that will be a shot in the arm for other Australian lithium players.

Blowback from the offer has been felt across the Australian lithium sector, with mining giant and lithium player Mineral Resources also seeing a stock jump of 5.9 per cent to trade at $80.98 and Core Lithium seeing a 15.38 per cent rise to trade at 90c since the offer was made yesterday (accurate as of 1:57 pm UTC+ 8 hours).

And what hits the big players will likely trickle down to the juniors as well, with Charger Metals seeing a similar share price jump of just under 20 per cent to trade at 30c, having just brought on a 25-year mining and exploration veteran as managing director and chief executive to ramp up exploration at its Bynoe and Lake Johnston Lithium Project.

It will be particularly exciting for Oar Resources which has been zeroing in on a number of lithium-bearing pegmatites at its Denchi Project just down the way from Kathleen Valley in WA’s northern Goldfields, with the Company’s faith in the Project leading it to expand the exploration area beyond a thousand metres with applications for five additional tenements covering lithium prospective land.

These repeated purchase attempts will also be of interest to Evergreen Lithium which is looking to list next month, with its own Kenny Lithium Project having just had substantial outcropping lithium pegmatites confirmed on site and being just 15km away from Liontowns second lithium play Buldania.

Alongside Kenny, Evergreen also holds land proximal to Core Lithium, with Evergreens Bynoe Project located in spitting distance of Core’s massive 15 million tonnes (Mt) at 1.3% lithium oxide Finniss Project and covering a northeastern strike extension of the high lithium-endowed Bynoe Pegmatite Field.

Liontown said that it is continuing to progress with a number of funding options for Kathleen Valley and expects to have an update in the near future.

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