Mineral Resources is rocking on with another ASX lithium share investment

This ASX 200 mining giant has been on a buying spree of late with several junior lithium miners in its sights.

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ASX lithium share Mineral Resources Ltd (ASX: MIN) is trading at $60.30 per share, up 3.93% on Tuesday afternoon. Meantime, the S&P/ASX 200 Index (ASX: XJO) is up 0.89% at the time of writing.

Much weaker lithium commodity prices in 2023 have pushed many ASX lithium shares lower, and Mineral Resources is no exception.

The ASX 200 mining giant is down 28.5% over the past 12 months, alongside a 75% fall in the lithium carbonate price.

Mineral Resources hasn't fallen by as much as lithium pure-plays like Pilbara Minerals Ltd (ASX: PLS) and Allkem Ltd (ASX: AKE) — down by 33.4% and 47.4%, respectively — because it is diversified.

MinRes also derives a lot of revenue from iron ore mining and mining services to other companies.

But Mineral Resources boss Chris Ellison clearly wants to change the balance and enhance the company's lithium exposure. That's why he's been on a buying spree alongside industry doyen Gina Rinehart of Hancock Prospecting.

In recent weeks, the billionaires have been snapping up strategic stakes in several junior lithium explorers.

Yesterday, we found out that both Ellison and Rinehart will be taking up their full entitlements in the $70 million capital raising announced by ASX junior miner Delta Lithium Ltd (ASX: DLI).

Why is this junior ASX lithium share raising cash?

Mineral Resources is Delta's biggest shareholder and is underwriting the offer.

The holdings of Rinehart and Mineral Resources represent a combined 22% ownership stake. This means their entitlements will account for about $15.4 million of the $70 million raising.

Ellison became Delta's biggest shareholder in August. He bought tens of millions of Delta Lithium shares to increase his stake to 17.44%. This scored him a seat on the board as non-executive chair.

The accelerated non-renounceable entitlement offer allows eligible shareholders to purchase two new shares for every seven that they already own. The offer price is 46 cents. This represents an 11.5% discount to the last traded price of 52 cents last Friday.

The institutional component of the offer will be concluded today. The retail component for Australia and New Zealand shareholders is anticipated to run from 20 November to 4 December.

Delta said the proceeds would be used to fund expanded drilling programs at its Mt Ida Lithium Project in the Goldfields region of Western Australia and the Yinnetharra Lithium Project in the Gascoyne region.

The monies would also cover the scoping study at Yinnetharra as well as a Definitive Feasibility Study and a Final Investment Decision at Mt Ida, which is expected late next year.

Delta Lithium shares remain in a trading halt following the announcement of the capital raise yesterday.

The ASX lithium share fell 5.45% last Friday after the company released an exploration update.

In it, Managing Director James Croser said it was a very exciting time for Delta. He said continued exploration success was steadily building confidence in the Mt Ida and Yinnetharra projects.

Delta Lithium also owns the Eureka gold project and the Earaheedy Basin PB-ZN project in Western Australia.

What else have Ellison and Rinehart been buying?

In recent weeks, Rinehart and Mineral Resources have both been buying Azure Minerals Ltd (ASX: AZS) shares.

The junior miner has accepted a $3.52 per share takeover from Sociedad Quimica y Minr de Chile SA (NYSE: SQM). Rinehart now owns 18.3% of Azure and Mineral Resources owns 12.29%.

Last month, Rinehart raided Liontown Resources Limited (ASX: LTR). She built a 19.9% stake while US giant Albemarle Corporation (NYSE: ALB) conducted due diligence for its takeover proposal.

That deal is now off the table.

Also last month, Ellison bought nearly a fifth of Wildcat Resources Ltd (ASX: WC8). The junior miner announced its own $100 million capital raising last Friday.

MinRes also lifted its stake in its own Wodgina hard rock lithium mine in the Pilbara from 40% to 50% after restructuring its joint venture deal with Albemarle.

As part of the JV restructure, Mineral Resources will receive between US$380 million and US$400 million from Albemarle. In exchange, Albemarle is taking full ownership of the Kemerton Lithium Hydroxide Plant.

On top of that, Mineral Resources recently announced US$1.1 billion (A$1.7 billion) in new debt funding via a notes offering, with funds to be used for general purposes "including for capital expenditures".

Emphasis on the CAPEX component, perhaps?

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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