24/11/2009 - 09:25

Talison Lithium to raise $194m in IPO

24/11/2009 - 09:25


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Perth-based Talison Lithium, which owns the Greenbushes lithium operation near Perth, plans to raise up to $196.4 million and dual list on the Australian and Canadian stock exchanges.

Talison Lithium to raise $194m in IPO

Perth-based Talison Lithium, which owns the Greenbushes lithium operation near Perth, plans to raise up to $196.4 million and dual list on the Australian and Canadian stock exchanges.

The company is a subsidiary of Talison Minerals Pty Ltd, incorporated in 2007 to acquire the minerals business of collapsed company, Sons of Gwalia.

Talison Lithium plans to raise between $143.5 million and $196.4 million through the issue of up to 35 million new shares and existing shareholder Resource Capital Fund IV selling up to 3.5 million of its shares.

The initial public offer will raise between $143.5 million and $178.5 million with shares priced between $4.10 and $5.10.

Talison Lithium said $82 million of the funds raised will be used to repay existing senior debt, $49.3 million will be used for general corporate purposes and working capital while $12.2 million will be for payment of the offer.

On completion of the offer, existing shareholders will hold between 54.7 per cent and 58.8 per cent of the company, with RCF as the largest shareholders with up to a 33.4 per cent interest.

On completion of the offer, Talison will have a market capitalisation of up to $433.5 million. It plans to list on the ASX on December 18.

On the board are chief executive Peter Robinson as non-executive chairman, Peter Oliver, executive director Frank Wheatley and non-executive directors Mark Smith, Mason Hills, Bryan Ellis and Ronnie Beevor.



Part of the announcement is below:


Talison Lithium Limited ("Talison Lithium" or the "Company") has lodged a prospectus with the Australian Securities & Investments Commission ("ASIC") for an initial public offering of its shares ("Offer"), ahead of Talison Lithium's proposed dual listing on the Australian Securities Exchange ("ASX") and the Toronto Stock Exchange.

Gross proceeds under the Offer are expected to be in the range of A$143.5 - A$196.4 million depending on the final price under the Offer and number of shares sold by one of the existing shareholders (as outlined below). Rothschild is acting as financial adviser to the Company on the Offer and Macquarie Capital Advisers Limited is the Australian Lead Manager to the Offer.

The Company will shortly commence the Australian and Asian components of a global roadshow to market the Offer to institutional investors.

Talison Lithium is the only major global pure-play lithium producer. The Company mines and processes lithium minerals at its Greenbushes Lithium Operations near Perth, Western Australia ("Greenbushes Lithium Operations").

Lithium, which occurs both in a mineral form and in the brines found in some salt lakes, has a large range of traditional and high-tech uses both as a mineral and as a chemical compound. Lithium minerals are used directly in the manufacture of glass, ceramics, heat-proof cookware and lithium chemicals. Key uses of lithium chemicals are in batteries, pharmaceuticals, greases and aluminium smelting.

Talison Lithium is an established producer of lithium and in 2008 supplied approximately 23% of the world's lithium supply. The Company has a unique, high grade lithium deposit at the Greenbushes Lithium Operations, from which a range of lithium concentrates are produced and sold directly and indirectly to a global customer base.

The market dynamics for lithium are attractive with lithium demand estimated to grow by approximately 6%1 per annum between 2008 and 2013. There are opportunities for expanding demand from eco-friendly applications, including the use of lithium in high-strength fibreglass for large wind turbine blades, and the secondary battery market, including growth in batteries for consumer goods such as mobile phones and laptop computers. The most significant upside potential for lithium demand is in the mass production of electric vehicles using rechargeable lithium batteries. A number of Governments (including the USA) have announced stimulus packages to advance the development and production of electric vehicles and many car manufacturers are now starting to develop electric vehicles incorporating lithium-ion batteries.

Commenting on the IPO, Peter Robinson, Chairman of Talison Lithium, said: "Talison Lithium has a world-class lithium deposit and as an established producer of lithium, the Company is well positioned to respond to an increase in market demand for lithium."

"With an experienced management team led by CEO Peter Oliver, and CFO Lorry Mignacca, the Directors believe that Talison Lithium will be able to leverage the competitive advantages of the Greenbushes Lithium Operations and build the Company's global market position," Mr Robinson said.

The Greenbushes Lithium Operations were acquired by a group of private equity firms led by Resource Capital Fund IV L.P. ("RCF") in August 2007 as part of a larger acquisition of the Sons of Gwalia advanced minerals division which comprised both lithium and tantalum assets.

Talison Lithium has also filed a preliminary prospectus with the securities regulators in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island in respect of a concurrent initial public offering of the Company in Canada ("Canadian Offering").

Summary of Offer

A total of 35 million new shares are being offered by the Company to investors under the Australian Offering and the Canadian Offering. In addition, RCF may offer to sell up to an additional 3.5 million existing shares.

Based on an indicative price range for the Offer of A$4.10 - A$5.10 per share, the total gross proceeds from the Offer are expected to be in the range of A$143.5 - A$196.4 million, depending on the final price and number of existing shares sold by RCF.

In addition, the Company has granted to the Canadian dealer syndicate for the Canadian Offering an option (the "Over-Allotment Option") to purchase from the Company at the final price up to 2 million shares to cover over-allocations, if any. There will be no Over-Allotment Option in the Australian Offering.

Approximately A$143.5 - A$178.5 million of the gross proceeds of the Offer will be used by the Company to repay all existing senior debt, pay for the costs of the Offer and for corporate and working capital purposes. If all or part of the Over-Allotment Option is exercised by the Canadian dealer syndicate, the proceeds will be used by the Company for corporate and working capital purposes. Up to A$17.9 million of the gross proceeds of the Offer may be remitted to the RCF in satisfaction for the realisation of their existing shares.

On completion of the Offer, the existing shareholders of the Company will hold, in aggregate 54.7% - 58.8% of the Company, with the largest shareholder, RCF, holding between 29.3% and 33.4% depending on the number of existing shares sold by it (excluding exercise of the Over-Allotment Option). RCF will also continue to maintain a representative on the Talison Lithium board after completion of the Offer.

On completion of the Offer, Talison Lithium is expected to be in a robust financial position witha producing lithium mine, minimal debt and a strong cash balance to fund growth opportunities.


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