Resource Capital Funds-backed Australian lithium producer in IPO

The mining-focused private equity firm will see its 56.9 percent stake in Talison Lithium fall to 29.3 percent if it sells part of its stake in the offer.

Australian lithium producer Talison Lithium, backed by Resource Capital Funds, plans to raise up to A$178.5 million ($164 million; €110 million) in an initial public offering in Australia and Canada.

Resource Capital Funds was not available for comment at press time.

The offer comprises 35 million new shares in the company and up to 3.5 million existing shares from Resource Capital Funds. The indicative price range for each share is between A$4.10 and A$5.10.

Presently, Resource Capital Funds has a 56.9 percent stake in Talison Lithium. If it sells the maximum amount of 3.5 million shares, its stake in the company will fall to 29.3 percent and it will nett A$17.85 million from the sale, based on the upper range of the offer’s indicative share price.

The majority of the capital raised will be used for to repay existing bank debt and the remaining will be used for general corporate purposes and working capital.

In August 2007, a Resource Capital Funds-led consortium acquired the lithium and tantalum assets of Australian mining company Sons of Gwalia, which entered into administration in 2004.

Subsequently, these assets were injected into Talison Minerals. Last month, the company set up Talison Lithium, which will acquire the lithium assets comprising Western Australia’s Greenbushes Lithium Operations, believed to be the world’s largest known ore reserve of lithium minerals.

In 2008, Greenbushes Lithium Operations produced about 69 percent of the world’s lithium minerals. In the 2009 fiscal year, it booked revenues of A$76.9 million.