Lithium Consolidated (ASX:LI3) capital raising


by Jessica Amir

Lithium Consolidated Limited (ASX:LI3) CEO, Shanthar Pathmanathan talks about the company's capital raising and focus on hard rock lithium and sale of its US lithium brine asset to Argosy Minerals.

Jessica Amir: Hello. I'm Jessica Amir for the Finance News Network. Thanks for your company today. I'm joined by Lithium Consolidated Limited (ASX:LI3) CEO Shanthar Pathmanathan. Shanthar, great to see you again and welcome back.

Shanthar Pathmanathan: Thank you, Jessica. Pleasure to be here.

Jessica Amir: So first up, Shanthar, LI3 for those who don't know has just sold its lithium project in Nevada selling the asset onto Argosy Minerals Limited (ASX:AGY). Just take us through the rationale behind this.

Shanthar Pathmanathan: Argosy is an ASX-listed company, much larger in size and with a very strong balance sheet. They're focused on lithium brine. The deal makes sense for them to be managing and operating the asset going forward. LI3 will retain a residual interest through a milestone payment upon discovery of a resource in Nevada, but we are very happy that Argosy will be assuming operatorship and ownership of this asset going forward.

Jessica Amir: And at the moment you are also undertaking a capital raise. Just take us through how that's going.

Shanthar Pathmanathan: The capital raising is going fantastically, Jessica, fantastic. We are raising money to do drilling specifically. As a company we raised $7 million initially to buy land around the world. We now have the largest portfolio of lithium exploration assets in the world. Full stop. We've got assets in WA, Mozambique, and Zimbabwe, hard rock lithium. This capital raising will be $3.2 million, split between a rights issue and a placement. The rights issue will be $1.2 million, and the placement will be $2 million.

Shanthar Pathmanathan: The offer will be at five cents a share with one free attaching option. So, investors will effectively be receiving two securities in the company through this offer at five cents a share the option, we'll have a strike price of five cents also and a 12-month term to maturity.

Jessica Amir: And so how does the company plan to use or invest the proceeds?

Shanthar Pathmanathan: We spent a few years to put this portfolio together, what I believe to be a world-class portfolio of world-class lithium exploration assets. And, in fact, now the largest portfolio of lithium exploration assets globally. We've got a multi-asset strategy, but having built that portfolio, we are now ready to drill some of our higher priority targets in Western Australia and Mozambique. In Western Australia, we will be drilling concealed ore bodies. One in fact neighbours Liontown Resources' (ASX:LTR) Buldania Project and our property is called the Bedonia Licence. In Mozambique, we will be drilling historical tantalum mines with surface expressions of the ore body in outcrops or in workings and the plan is essentially to use all of the money for drilling over the next 12 months, 3,600 meters in Mozambique and something of that order in Western Australia as well.

Jessica Amir: And just lastly, Shanthar, before we let you go, we're seeing the lithium market somewhat squeezed from where it was this time last year. So, where does LI3 sit currently and how does it plan to take advantage of the current market conditions?

Shanthar Pathmanathan: Jessica, what we see is exceptionally strong demand growth, right? 20% per annum, year on year, exceptionally strong number. We take a lot of comfort in that. And at the same time, you are correct, the sector is somewhat challenged. And so our peers in terms of the their share price performance, we are looking through this, our plan as a company with multiple lithium exploration assets is to deliver into a future lithium market, a market that's going to require a whole lot more lithium than what is being supplied today. And so, we've got a longer-term horizon for our portfolio. So, look, where we stand, these are short term gyrations in a sector that's growing rapidly, and it's similar to other sectors that happened in oil at the beginning of... about a hundred years ago, right? So, we think there's an overreaction at this point in time. It will correct itself as long as the demand growth is going to absorb the oversupply in the market. We think we're exceptionally positioned with multiple lithium assets in the known hard rock lithium provinces of the world to deliver the future lithium mines for the world in five, 10 years from now.

Jessica Amir: Well, thank you so much for your insights and for the company update, Shanthar Pathmanathan.

Shanthar Pathmanathan: Absolutely. Jessica, thank you for having me again.