Liontown Resources Ltd (ASX: LTR) shares have returned from their trading halt with a bang on Monday.
In morning trade, the lithium miner's shares are up 25% to a 52-week high of $1.06.
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What's going on with Liontown shares?
Investors have been buying Liontown shares today after some big industry news offset any potential selling pressure from the company completing a major capital raising.
That big news is that a major Chinese mine owned by CATL has suspended production, sparking hopes that this could be the start of wider output curbs to tackle overcapacity.
According to Bloomberg, CATL has suspended production at its Jianxiawo mine in China's Jiangxi province for at least three months.
And while the suspension of just one mine is not expected to have much of an impact on lithium prices, this could change if more follow.
Zhang Weixin, an analyst at China Futures Co, told the media outlet:
Prices may deviate from reasonable levels in the short term, but CATL's situation does not change the oversupply structure in the market. However, if production disruption is expanded to other mines in Yichun after Sept. 30, the lithium price level could go even higher.
Capital raising
In other news, this morning Liontown revealed that it has successfully completed the bookbuild for a fully underwritten $266 million institutional placement to new and existing investors at $0.73 per new share.
This represents a 13.6% discount to where Liontown's shares last traded.
The company also revealed that it has exercised its discretion to accept oversubscriptions by way of a non-underwritten conditional placement to Canmax Technologies, alongside other institutional investors at the placement price to raise a total of $50 million.
Liontown highlights that Canmax is a large industrial conglomerate and is one of the world's leading producers of lithium chemicals and a significant consumer of lithium raw materials.
Commenting on the successful capital raising, Liontown's managing director and CEO, Tony Ottaviano, said:
I'm very pleased with the strong support we've received for this Placement, which attracted significant demand from high-quality institutional investors, both in Australia and offshore. Despite challenging market conditions, the backing from the equity markets, who have contributed 84% of the money raised, alongside support from the National Reconstruction Fund Corporation, underscores the quality, long-term value, and strategic importance of Kathleen Valley to the Australian economy and national interest.
The investment in Liontown by Canmax, a world leading producer of lithium chemicals, in the Conditional Placement reflects confidence in the long-term value of the Kathleen Valley Operation, and we think is a strong positive indicator for the demand outlook of lithium products. This capital raising fortifies our balance sheet, supports the ramp-up and transition to 100% underground operations, and ensures we're well positioned to capitalise on a recovery in lithium prices.
