Liontown Resources Ltd (ASX: LTR) shares were in focus today on news that Gina Rinehart’s Hancock Prospecting had bought a substantial stake.
Liontown Resources is a relatively large lithium business on the ASX, while Gina Rinehart is one of Australia’s richest people and Hancock Prospecting is one of the largest iron ore miners in Australia.
Liontown Resources share price
Hancock pounces
Hancock released a statement that said that it had become a substantial shareholder after the purchase of 7.72% of the ordinary issued Liontown shares.
Gina Rinehart’s business said that Liontown’s Kathleen Valley lithium project in Western Australia is a “prospective high-quality hard-rock lithium deposit in its development phase, which whilst still having a number of significant risks including resource conversion, construction execution and metallurgical recovery, has the potential to operate at scale.”
Why has Hancock bought these Liontown shares?
Hancock explained that its investment will provide Liontown with the “opportunity” to leverage Hancock’s expertise “where it is of value to support the project’s development and subsequent operations.”
Rinehart’s business suggested that it can contribute to Liontown’s future direction alongside other Liontown shareholders, including the “potential investment opportunities for downstream value-add in Western Australia.”
Hancock also said that it may seek a position on Liontown’s board.
Takeover battle?
It’s an interesting move by Hancock Prospecting, and raises the question of whether a takeover offer will come next.
Liontown recently revealed that it had received an improved non-binding proposal from lithium business Albemarle Corporation to acquire all of Liontown for $3 cash per share.
It was announced yesterday that, after agreeing terms for non-disclosure and exclusivity, Albemarle will start due diligence shortly, which is expected to take approximately four weeks. That due diligence will be done on an exclusive basis, so that may complicate matters for Hancock Prospecting.
I wouldn’t count on Hancock Prospecting launching a bid, but it’s interesting considering that the Liontown share price is already at $3.
