Liontown shares jump on $379m investment from LG Energy Solution
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More news: Liontown Resources were 6.2% higher at 3:41pm AEST, after initially soaring more than 15%, following its announcement that it had secured an investment from South Korean battery producer LG Energy Solution.
The US$250 million ($379 million) investment will provide balance sheet strength to fund the ramp-up of its Kathleen Valley lithium mine in Western Australia.
Liontown secures $379m investment from LG Energy Solution
The news: Liontown Resources has secured a USD250 million ($379 million) investment and 10-year offtake extension from South Korean battery producer LG Energy Solution at its Kathleen Valley lithium mine in Western Australia.
The numbers: The extension of Liontown's current offtake agreement with LG by 10 years takes the deal to 15 years in total. Liontown will provide 700 kilotonnes of spodumene concentrate over the first five years and 1,500 kilotonnes over years six to 15 in aggregate.
Liontown's strategic partnership with one of the world's largest manufacturers of lithium-ion batteries will see the ASX-listed lithium developer increase its total cash balance to around $501 million.
The company said the investment will provide balance sheet strength to fund the ramp-up at Kathleen Valley to 3 million tonnes per annum (3Mtpa) steady state production.
The context: Liontown said the funding will progress early enabling works in the underground mine to preserve the option of a 4Mtpa expansion by 2027, while supporting 3Mpta production. The company said it is continuing optimisation studies for both the mine and the processing plant as part of its review of the 4Mtpa expansion case.
The two companies also agreed a downstream collaboration agreement to explore the feasibility of establishing an Inflation Reduction Act (IRA)-compliant lithium refinery, aimed at processing spodumene from Kathleen Valley into battery-grade lithium chemicals.
Liontown said the Kathleen Valley project remains on schedule and on budget to first production, which is anticipated by the end of July.
What they said: Liontown's managing director and CEO Tony Ottaviano said: "LG Energy Solution's long-term investment in Liontown is a testament to the world-class quality of the Kathleen Valley project and a tremendous endorsement of the capability of our team".
"The funding will be instrumental in supporting the production ramp up to 3Mtpa and early works necessary to preserve the potential 4Mtpa expansion case for Kathleen Valley," he said.
LG's CEO David Kim said: "The agreement represents another significant step in our value chain investment strategy aimed at enhancing its resilience to market uncertainties."
"By partnership with strong players like Liontown, we will continue to secure stable supply of IRA-compliant critical minerals, fulfilling our efforts to provide competitive power solutions for electrification," Kim said.
The source: ASX announcement
