Liontown Resources chair Tim Goyder has shed more light on why the company turned down Albemarle’s initial takeover offer.
In doing so, Goyder suggested there were different price understandings.
“I guess the best people to ascertain the value of a company are the operators of the company or the board,” Goyder said on the sidelines of the Resources Rising Stars conference on the Gold Coast.
“We like Albemarle, believe it’s a great company, but the only thing we differ on is the price and the longer-term shareholders, including myself, look forward to dividends.”
Albemarle priced its bid at $2.50 per share, representing a 63 per cent premium to Liontown’s closing share price on March 27.
At the time of its rejection, Liontown deemed the bid “opportunistically timed” given the “recent softness” of companies exposed to the lithium sector and the pre-production status of Liontown’s Kathleen Valley project.
Liontown believed it also wasn’t reflective of the company’s upside, where Kathleen Valley is set to enter production in just over a year.
There have been no further updates on the transaction, and it remains to be seen whether Albemarle will return with a revised bid. History says it is more likely than not.
When asked what makes Liontown an enticing investment proposition, Goyder said investors should assess the potential of Kathleen Valley.
“You’ve got to look at the deposit, it all comes back to the deposit,” he said. “We’ve got a 25-year mine life there (at Kathleen Valley), a production rate in the order of 600,000 tonnes per year of concentrate.
“We’ve got five years locked away with Tesla, Ford and LG Energy Systems, so come year six and onwards, hopefully we’ll be doing downstream and during that period, we’re quite confident of paying dividends.”
Liontown has established five-year offtake partnerships with Tesla, Ford and LG Energy Solutions, each involving the purchase of up to 150,000 tonnes of spodumene concentrate per annum.
Goyder said ahead of Kathleen Valley’s mid-2024 start date, the project is advancing quickly.
“We came up with a revised capex (capital expenditure) of nearly $900 million, and that capex was predicated on the basis of trying to meet our timelines of July 2024 and we’re going to do that,” he said.
“We now have 400 people on-site, and we’re spending lots of money and making lots of progress.”
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