Australian lithium developer Liontown Resources has announced a significant deal with South Korean electric vehicle battery maker LG Energy Solution (LGES). The deal includes $250 million in funding through a five-year convertible note, as well as a 10-year extension to Liontown’s existing lithium supply agreement from its flagship Kathleen Valley operations.
The $250 million in funding from LGES, at a conversion price of A$1.80 per share, will help address a funding shortfall for Liontown as it prepares for first production at Kathleen Valley later this month. This new funding, combined with an existing facility from Ford Motor, replaces a previous A$550 million ($365.3 million) debt facility that was set to expire in October 2025.
As part of the agreement, Liontown will make available an additional 250,000 tonnes of lithium spodumene concentrate to LGES over the first 10 years of the extended 15-year supply deal. The companies have also agreed to jointly explore setting up a lithium refinery to process the spodumene produced at Kathleen Valley into battery-grade lithium chemicals.
LGES CEO David Kim said the partnership with Liontown would help his company continue to secure a stable supply of critical minerals, which is important for compliance with the U.S. Inflation Reduction Act.
Liontown’s Kathleen Valley project in Western Australia remains on budget and on schedule for first spodumene production by the end of July. Once ramped up, the project is expected to produce 3 million tonnes of spodumene concentrate per year.
The news of the funding and supply deal sent Liontown’s shares up 15.2% when trading resumed after the announcement. However, the lithium market has seen spodumene prices drop towards three-year lows below $1,000 per metric ton, currently around $1,040, as rising inventories of lithium chemicals are expected to drive further price declines of 15-20% in the coming months.