Australia
This article was added by the user . TheWorldNews is not responsible for the content of the platform.

Gina Rinehart again lifts stake in takeover target Liontown

Billionaire mining magnate Gina Rinehart has lifted her stake in takeover target Liontown Resources for the second time this week, doubling down on her concerns for the lithium prospector’s flagship project amid news of a cost blowout.

On Friday, Rinehart’s company Hancock Prospecting confirmed it had increased its stake from 10.69 per cent to 12.39 per cent after picking up another 38.8 million shares for $108.8 million.

Gina Rinehart revealed she had increased her Liontown shareholding on Monday.

Gina Rinehart revealed she had increased her Liontown shareholding on Monday.Credit: Trevor Collens

The news comes days after it revealed it had gone on a $132 million-share buying spree, taking her total spend over the past month to $740 million.

The move comes as US giant Albemarle continues its due diligence ahead of its proposed $6.6 billion takeover.

Liontown’s shares have continued to hover around the $3 mark in recent weeks, giving the company a market capitalisation of $6.62 billion.

But they dropped 1.34 per cent after the lithium prospector announced the cost of its flagship Kathleen Valley project had grown by $56 million to $951 million.

The fresh costings, however, do not account for early mine development, an acceleration of production from 3 million tonnes per year to 4 million tonnes or the construction of stockpiles – all of which have a combined value of $63 million.

Liontown’s chief executive Tony Ottaviano said the company remained confident the project would begin first production by mid-2024, with all major construction and mining contracts now issued.

But in a statement released on Friday, Hancock Prospecting said the news only reinforced the company’s previous observations that the project faced “significant execution, operational ramp-up and market risks”.

The company pointed out the capital cost increase did not account for inflation, and warned the actual cost of the project could exceed $1 billion.

While the costings included rates and quantities for awarded contracts, Hancock said the productivity, design, quantity and schedule risks remained squarely with Liontown.

The Rinehart-chaired company pointed out that the lithium prospector’s revised operating cost estimate had grown by almost 50 per cent.

And the company warned it would be shareholders who would shoulder the burden on meeting the cost of additional funding.

“Liontown’s need to debt fund part of its capital costs, and the [Direct Shipping Ore] revenue source that is on hold, has now increased to a minimum of $450 million – which Liontown has indicated may need to be further increased,” the company said.

“Ultimately, it is the Liontown shareholders that will have to meet the cost of this additional funding.”

Rinehart’s decision comes as Albemarle continues its due diligence ahead of a vote on its takeover offer, which includes running the ruler over its lucrative early-stage lithium project in the Goldfields.

It is understood Albemarle was made aware of the fresh cost hikes.

Liontown has already inked supply deals with the likes of Ford and Tesla for Kathleen Valley, a hard-rock lithium deposit hailed among the most promising in the country.

But Hancock Prospecting spotlighted the risks attached to the project in a notice to the ASX before touting its own credentials delivering projects on time and under budget, including its $10 billion Roy Hill iron ore mine.

Earlier this month, Liontown’s board voiced its intention to unanimously recommend shareholders vote in favour of the takeover, provided it did not receive a superior proposal.

The September bid was the third levelled by the New York chemicals giant and comes as the battle among electric vehicle manufacturers to secure the raw material intensifies.

The lithium company’s chair Tim Goyder remains its largest shareholder, retaining a 15 per cent stake, while another 20 per cent is reportedly held by investors closely aligned to him.