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Australia invests $33 million in Liontown's Kathleen Lithium operations

The Australian Government announced on Thursday that it would invest A$50 Million ($32.5 Million) in Liontown Resources in order to ramp up operations at the flagship Kathleen Valley Project and to transition from surface mining to underground mining. This is part of a plan to increase domestic mineral supply.

The A$15 billion National Reconstruction Fund Corporation will make the investment. This is part of Prime Minister Anthony Albanese’s effort to support critical mineral projects as well as boost domestic manufacturing.

David Gall, CEO of NRFC, said that lithium is a vital mineral and is at the heart of both decarbonisation efforts as well as the Future Made in Australia government strategy.

"Australia is well positioned to be a long-term, competitive supplier of lithium for the rest of world. Local lithium production is vital to the nation's resilience and economic security."

In January, NRFC spent A$200m in Arafura Rare Earths for the development of a new mine at Nolans in central Australia.

According to NRFC, Kathleen Valley will have a mine life of more than ten years and produce 500,000 tons of spodumene per year with the potential to expand.

Liontown is an important lithium supplier for Tesla, Ford, and LG Energy Solution.

The government investment is part Liontown's A$266million institutional capital raise priced at A$0.73per share. The shares of Liontown were last traded at A$0.845 on Thursday before they were halted pending the announcement.

The miner can also use the capital to strengthen its balance sheet.

According to LSEG data, Hancock Prospecting, owned by Gina Rinehart, a billionaire Australian, is Liontown's largest shareholder with 18% of the shares. Hancock Prospecting is not expected to participate in the placement as it would dilute their stake.

Hancock refused to comment while Liontown didn't respond to an email seeking comment.

(source: Reuters)