The past two weeks have been a diabolical time for the Liontown Resources Ltd (ASX: LTR) share price.
Shares in Liontown have tumbled more than 30% following the withdrawal of a takeover bid from North Carolina-based Albemarle Corporation (NYSE: ALB) — one of the largest lithium producers globally. It is believed, though not explicitly confirmed, that the $3 per share offer fell through due to Gina Rinehart's 19.9% stake creating "complexities" to the transaction, as Albermarle put it.
One week on from sharing a parting glass with Albermarle, where does Liontown Resources stand?
Image source: Getty Images
How is the lithium company positioned now?
The Kathleen Valley Lithium project was assigned $951 million in project capital costs in September in order to reach production. Prior to October, all major contracts for construction and mining had already been awarded, making funding a priority.
However, without Albermarle's coffers, Liontown needed to come up with the cash elsewhere. Both debt and equity markets were tapped to get the funds needed to bring Kathleen Valley to life. The funding is comprised of $760 million in debt and up to $421 million in equity.
The combination of the two exceeds the aforementioned $951 million in capital costs. As Liontown chair Tim Goyder phrased it in the video above, "We are now fully funded with a rock-solid balance sheet to complete construction and move into production and beyond."
Unfortunately, the capital raising means the total number of Liontown shares will increase by approximately 10%. In turn, any shareholders who aren't able to participate fully will be diluted.
It is believed Gina Rinehart, Western Australia's mining magnate, participated in the raise. If true, it would mean the Hancock Prospecting executive chair would retain a 19.9% stake in the lithium upcomer.
As of 19 October, Liontown was said to be on track to start producing the critical material by mid-2024.
Looking ahead for the Liontown Resources share price
What the Liontown Resources share price will look like a year from now will be predicated on a range of factors. Assuming the Goyder-guided company reaches production next year, the price of lithium will arguably hold the most influence over the miner's value.
Currently, analysts are divided over the prospects for the Liontown share price.
Both Barrenjoey and JP Morgan have cut their ratings to underweight and assigned price targets of $1.60 and $1.30, respectively. In contrast, the team at Macquarie raised their rating to outperform with a $2.70 target on Liontown shares.
Macquarie's price target would suggest a potential 49% upside to the current Liontown share price of $1.82.
