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Liontown Resources (ASX:LTR) - Managing Director and CEO, Tony Ottaviano - The Market Herald
Managing Director and CEO, Tony Ottaviano
Source: Liontown Resources
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  • Ramelius Resources (RMS) will part with its royalty entitlements after agreeing to sell them to Liontown Resources (LTR) for $30.25 million in cash
  • The royalties relate to the Kathleen Valley Lithium-Tantalum Project in WA which LTR bought off Ramelius back in 2016
  • Under the sale, Liontown agreed to pay RMS a royalty of 1 per cent of gross sales and 50 cents per tonne of ore mined and milled from the project
  • LTR argues buying back the royalty will help it reduce operating expenses at Kathleen Vallley, while RMS will use the funds to support its gold projects
  • Shares in Ramelius Resources have spiked post-sale and are up 6.74 per cent at $1.82, while shares in Liontown are up 1.08 per cent at 93.5 cents

Ramelius Resources (RMS) will part with its Kathleen Valley royalty entitlements after agreeing to sell them to Liontown Resources (LTR).

Liontown agreed to buy 100 per cent the Kathleen Valley Lithium-Tantalum Project, located in WA, off of RMS way back in 2016.

As part of the original deal, LTR agreed to pay Ramelius a royalty of 1 per cent of gross sales and 50 cents per tonne of ore mined and milled from the project.

However, under a new agreement signed on Monday, RMS has agreed to terminate the royalty deal in return for a payment of $30.25 million.

Liontown will pay the consideration in cash and Managing Director Tony Ottaviano said the sale will help reduce the project's operating expenses.

"The termination of this royalty is expected to enhance the NPV of Kathleen Valley and lower its position on the cost curve," Mr Ottaviano said.

"It will further cement the tier-one credentials of the Kathleen Valley Project at a time when the outlook for the lithium market continues to improve.

"This supports our ongoing strategy of improving the project’s financial metrics and enhancing its attractiveness and optionality as the only large, uncommitted, pre-development phase hard rock lithium asset in the developed world."

Once the $30.25 million in paid to RMS, Liontown said it would still have $33 million worth of cash and liquid assets in the bank.

Meanwhile, Ramelius Managing Director Mark Zeptner said the royalty sale would help the company further grow its gold assets.

"We are very fortunate to have been able to benefit from the battery minerals thematic and having considered this asset as non-core for some time, we felt that now was the time to exit and use the funds to support our gold growth story," Mr Zeptner said.

Today's deal has dealt Ramelius a considerable share price bump, with RMS shares trading up 6.74 per cent at $1.82 per share.

Liontown's share price also rose, with shares up 1.08 per cent at 93.5 cents each at 10:46 am AEST.

LTR by the numbers
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