Gina Rinehart’s Hancock Prospecting has increased its strategic stake in Liontown Resources to 12.4 per cent ahead of Albemarle’s $6.6 billion takeover.
The increase is the second jump in shareholdings for Hancock in recent weeks, with its announcement last week of a 10.7 per cent stake up from its initial 7.72 per cent investment earlier in September.
The boost increased Hancock’s stake by an additional $108.8 million, which Hancock said is a decision reinforced by Liontown’s ASX update on September 28.
Liontown confirmed a further $56 million capital cost increase to $951 million on a ‘real’ basis ignoring inflation.
“Factoring in inflation over time, the actual capital cost could be in excess of $1 billion,” Hancock said.
“This follows Liontown’s prior cost increased, above the $473 million estimate from its definitive feasibility study.”
Liontown’s revised operating cost estimate increased by around 50 per cent on previous estimates.
Only last month, Liontown announced it was proceeding with a direct shipping ore (DSO) product to provide an early source of revenue from the project, describing the economics as compelling.
Hancock said Liontown today put the DSO on hold indefinitely due to declining lithium prices.
The Albemarle takeover is also left in unclear territory as Hancock’s 12.4 per cent surpasses the 90 per cent threshold that entitles a stakeholder to compulsorily acquire the remainder of shares.
Albemarle is currently coming to the end of its four-week due diligence period to assess Liontown, only time will tell how Hancock’s investment will impact the takeover.
Hancock has emphasised its interest in working alongside other Liontown shareholders, with a potential position on the Liontown board.
Even without the board representation, Hancock’s 12.4 per cent consolidates its voice in the future of Liontown.