Liontown Resources rejects US$3.7B acquisition proposal from Albemarle

Liontown Resources, an emerging battery minerals producer based in Australia, has rejected an unsolicited, conditional and non-binding indicative proposal from Albemarle Corporation, in which Albemarle would acquire all of the shares in Liontown at a price of A$2.50 per share—valuing the company at approximately US$3.7 billion.

The proposal represented a 63.9% premium to the ASX-listed company’s last close.

Liontown controls two major lithium deposits in Western Australia: the flagship Kathleen Valley project in Western Australia and the Buldania Project in the Eastern Goldfields Province of Western Australia. The Kathleen Valley project is one of the world’s largest and highest-grade hard rock lithium deposits, according to the company.

Liontown said that it recently became aware that RT Lithium Ltd, a subsidiary of Albemarle, has been building a stake in Liontown through on-market purchases. Based on the most recent share registry information available, RT Lithium now holds ~2.2% of Liontown’s issued shares.

In coming to its decision, the Liontown Board noted the opportunistic timing of Albemarle’s proposal, coinciding with recent softness in companies exposed to the lithium sector and the pre-production status of the Kathleen Valley Project. In addition, the Board observed that the Indicative Proposal does not reflect:

• The significant de-risking that has occurred at the Kathleen Valley Lithium Project in recent months, with mining operations commencing, construction progressing to schedule and Liontown remaining on track to deliver first production in mid-2024.

• Liontown’s extensive growth optionality both at Kathleen Valley—including potential early revenue from Direct Shipping Ore (“DSO”), the recently announced 20% increase in plant throughput rate to 3Mtpa, the direct future downstream participation, and other expansion opportunities being explored—and its broader portfolio including Buldania.

• The scarcity value of the Kathleen Valley Lithium Project—there are few other lithium assets of this scale, quality and mine life this close to production in Australia, one of the most attractive mining jurisdictions in the world.

• The positive near-term outlook for existing or new lithium producers, underpinned by a forecast growth in global lithium demand of 5x by 2030, with predicted supply deficit that is expected to deliver stronger lithium prices for longer.

• Significant synergies that would be available to Albemarle should it acquire Liontown, given its existing operations in Australia.

Liontown continues to progress a number of funding options for the remaining capital at the Kathleen Valley Lithium Project and expects to update the market on this front in the near term.