IGO snares stake in lithium mine, plant for $1.9b
Brad ThompsonReporter
Dec 9, 2020 – 10.27am
Nickel and gold miner IGO Limited has snared a minority stake in Australia's top lithium mine and a foothold in lithium processing in a $US1.4 billion ($1.9 billion) deal with struggling Chinese battery metals company Tianqi.
Tianqi, under pressures from its lenders, is selling IGO a 24.99 per cent stake in the Greenbushes mine in Western Australian and a 49 per cent per cent stake in its troubled lithium hydroxide plant at Kwinana south of Perth.
IGO intends to fund the acquisition through a new $1.1 billion debt facility, an equity raising for up to $766 million and its cash reserves.
Tianqi has been increasingly desperate to sell part of its 51 per cent stake in Greenbushes and wholly owned lithium plant.
It will retain a 26 per cent stake in Greenbushes and a 51 pre cent stake in the hydroxide plant.
US battery metal giant Albemarle, which owns a 49 per cent of Greenbushes and is building its own lithium hydroxide plant in WA, is not involved in the IGO-Tianqi transaction.
Shenzhen Stock Exchange-listed Tianqi lenders, led by state-owned CITIC Bank, last week agreed to give Tianqi a 26-day extension on repayment of a $US1.9 billion ($2.6 billion) loan.
IGO managing director Peter Bradford said it was a transformative deal for the company as it looks to a future in battery metals and pursues a sale of its minority stake in Tropicana gold mine in WA.
"We see Tianqi, a leader in the global lithium industry and with strong alignment to our strategy, as the ideal partner for IGO," he said.
"Both Greenbushes and Kwinana are world-class assets with attractive growth profiles that together provide the platform for building a global lithium business."
The IGO raising launched today includes a $446 million fully underwritten placement at $4.60 and a $320 million 1-for-8.5 pro rata entitlement offer.
The offer price represents a 9.7 per cent discount to IGO's last traded price of $5.095 on December 7.
Tianqi put plans for a second stage of its Kwinana plant on hold after the first stage cost $770 million, almost double the original budget of $400 million.
Brad Thompson writes across business and politics from Western Australia for The Australian Financial Review. Brad is based in our Perth bureau. Connect with Brad on Twitter. Email Brad at brad.thompson@afr.com
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