The good times roll on at the National Reconstruction Fund Corporation, or NRFC.
Less than a week ago, the government fund's seemingly audacious investment in Liontown Resources Ltd (ASX: LTR) was facing scrutiny.
Commentators and analysts were throwing mud at the move, which saw the fund hand $50 million of taxpayers' money to the lithium miner.
The cash was earmarked to "support the ramp-up and underground transition" of Liontown's Kathleen Valley Lithium Operation.
The fund's investment was part of a $266 million institutional placement, which saw Liontown enter a trading halt on Friday.
Investors were invited to take part in the placement at $0.73 per new share, a 13.6% discount on Liontown shares prior to the halt.
A matter of national concern
The NRFC and its CEO, David Gall, accepted the invitation.
Lithium is a critical mineral that is central to both decarbonisation efforts and the government's Future Made in Australia strategy.
Australia is well-positioned to be a competitive, long-term supplier of lithium to the rest of the world and local lithium production is important to the nation's economic security and resilience.
Our investment in Liontown will help to attract private capital and develop Australia's resources sector. It is aligned with the government's strategy of transforming Australia into a global leader in the critical minerals supply chain.
The move came as a welcome reprieve for Australia's lithium players.
The government was throwing support behind long-suffering lithium companies struggling as lithium prices linger around a four-year low.
Although the funds were only allocated to one lithium miner, the action was a clear endorsement for lithium and critical minerals.
Though not everyone was behind the move, with some questioning the fund's investment in Liontown.
Concerns were heightened when it was revealed Australia's richest woman, Gina Rinehart, was steering clear of the capital raising initiative.
The absence of Rinehart's Hancock Prospecting from the placement was particularly troubling for some.
Hancock Prospecting, with an 18.1% stake in Liontown, is the lithium miner's biggest shareholder.
So what did Hancock know that the NRFC didn't?
Clearly, the smart money was sitting on the sidelines.
Or was it?
Big bet pays off
ASX lithium shares started the week by notching up startling double-digit gains.
The price of lithium is showing convincing signs of recovery as a Chinese mine suspends operations.
As such, investor enthusiasm for ASX lithium shares is undergoing a resurgence.
And Liontown emerged from its trading halt as a standout performer.
With Liontown shares currently trading at around $0.95 each, it appears the NRFC's investment was far more prudent than many first thought.
Assuming the NRFC snapped up Liontown shares at the offer price of $0.73 per share, the fund's investment is already up around 30%.
In other words, the fund can claim a profit of $15 million in less than a week.
With all that in mind, the NRFC's next move is keenly awaited.
