Liontown lets Albemarle into due diligence den

afr.com:

Lithium-play Liontown Resources has allowed New York-listed Albemarle into its data room to undertake exclusive due diligence for four weeks, kicking off the $6.6 billion sale of the Perth-based miner.

Albemarle’s $3 per share cash offer won over the Liontown board led by Tim Goyder last Monday. It made for a 14.5 per cent premium to Liontown’s closing share price on September 1, and 20 per cent higher than the $2.50 offer rejected as far too low in March.

“Liontown and Albemarle have now agreed the terms of that non-disclosure and exclusivity agreement, and Albemarle is expected to commence its due diligence shortly,” Liontown told investors on Monday morning.

Tony Ottaviano, CEO of Liontown, at the Kathleen Valley mine site.  Evan Collis

Albemarle will also need to seek Foreign Investment Review Board clearance to acquire Liontown, which is opening the Kathleen Valley lithium mine in Western Australia.

However, the federal government’s desire for “like minded” foreign investors means Albemarle is expected to be spared the sort of resistance from FIRB that derailed two Chinese attempts to buy domestic lithium assets this year.

Albemarle succeeded in winning FIRB approval when it acquired half of Mineral Resources’ Wodgina lithium mine in WA, adding to its interest in WA’s Greenbushes mine and its lithium hydroxide plants.

The breakthrough with Liontown came after Albemarle boss Kent Masters visited WA last week and confirmed to The Australian Financial Review he was keen on a deal.

Albemarle intends to finance the deal through bonds, debt and its cash reserves. The company said the transaction fitted within its investment criteria, even at “trough” lithium hydroxide pricing of $US15-$US20 a kilogram, and represented a