Albemarle’s exit from the Gina Rinehart-backed Liontown Resources has condemned the one-time market darling to a 60 per cent value drop since its last heyday in October.
Shares in Liontown dropped to $1.17 on Thursday morning, before recovering slightly to $1.19 by noon — a decrease of 12 per cent from its previous close.
This marks its lowest share price since July 2022, right before Albemarle began circling around the Tim Goyder-chaired lithium hopeful.
Liontown confirmed to The West Australian on Wednesday afternoon Albemarle was in the process of selling its 4 per cent stake, which encompasses nearly 96.3 million shares.
The sell down is part of a broad belt-tightening strategy, which will include a delay in progressing train 4 at its Kemerton lithium hydroxide plant near Bunbury.
The Australian Financial Review has reported Albemarle completed the sale at $1.26 per share, which would have netted the US chemicals giant around $121 million.
The West can reveal that Albemarle’s average entry price was around $1.90, lower than previously suggested by sources close to Liontown.
A $1.26 sale means Albemarle has made a loss on its Liontown investment of around $62m.
Albemarle made failed attempts to snare Liontown for $2.20 a share in October 2022 and for $2.35 in early March.
Albemarle swiftly boosted its holding to about 4.3 per cent via on-market purchases between late March and early April, at a time when Liontown’s shares were mostly trading between $2.50 and $2.60.
It came back to the table with a $3 per share bid, which was waved through by Liontown, but ultimately scuppered in October by a blocking stake Gina Rinehart’s Hancock Prospecting had rapidly assembled.
Hancock effectively killing the $6.6 billion deal intertwined with plunging lithium prices sent Liontown’s shares into free fall.
Its share price was mauled further by a $1b debt and equity funding package that included a heavily-discounted capital raising, which Liontown was forced to cobble together after the Albemarle acquisition fell through.
Shares in Liontown peaked at $3.20 in June 2023.
Hancock owns an 18.1 per cent chunk of Liontown, chairman Tim Goyder controls 13.9 per cent and the soon-to-be gone Albemarle is the third largest shareholder.
Liontown’s flagship asset is the Kathleen Valley lithium project in the northern Goldfields.
First production is scheduled for the middle of this year.