What’s Gina Rinehart’s deal with Liontown?
October 16, 2023Gina Rinehart is super keen to get her hands on Liontown Resources’ hotly contested Katherine Valley lithium project and its 400,000 tonnes of lithium concentrate per year, imminently heading for export markets over the next 40 years.
This week, Rinehart increased the Hancock stake to 18.36 per cent, claiming she did it with nothing but wholesome intentions of helping to guide the project, thereby giving it the best chance of success.
Mr Lithium Joe Lowry does not question Rinehart’s stated intentions but suggests other motivations could also be at play.
“Clearly, she has something in mind,” Lowry told me on LinkedIn. “The question is, does she go it alone?” he continued.
“[She could] partner with MinRes (her frenemy Chris Ellison) or even do a deal with ALB (least likely but possible outcome).
“Lithium Drama…replaces Drama in the Atacama,” he finishes.
Drama in the Atacama is the name given to the “telenovela” of difficulties companies such as Albemarle faced in Chile in their bid to extract and commercialise lithium in the country.
The lithium industry is experiencing a boom, as demand for lithium has surged with the world’s focus on renewable energy sources. However, many lithium operations have failed in the past, and it is essential to be cautious even in boom times.
Liontown’s Kathleen Valley lithium project faces significant challenges, including significant cost increases. The latest capital cost estimate is $951 million, which could rise to over $1 billion when accounting for inflation. The revised operating cost estimate has also increased by about 50%. Additionally, Liontown will require more funding to complete the project.
Despite these challenges, Liontown remains optimistic about its early revenue strategy, which involves directly shipping ore to secure cash flow in the early stages of project funding. The Kathleen Valley lithium project has the potential to be a significant asset and contribute to the clean energy revolution in every way possible. Liontown is leading the lithium industry even without Rinehart guiding the ship.
About Liontown Resources
Liontown Resources (ASX:LTR) is a Tier-1 battery minerals producer to become a significant provider of battery minerals. The ASX100 company controls the Kathleen Valley lithium project and another significant lithium deposit in its home state of Western Australia. Kathleen Valley has a 20-year mine life and an ore reserve of 68.5 million tonnes, grading 1.34% lithium and 120 parts per million tantalum. The Liontown board has backed a $6.6 billion offer for the company from North American lithium major Albemarle. The exclusive bidder previously valued the company at $3 a share and is still undertaking a due diligence assessment of the takeover target.
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