ioneer Ltd has struck up a joint venture agreement with dual-listed miner Sibanye Stillwater Ltd in a bid to advance the Rhyolite Ridge Lithium-Boron Project in Nevada.
Under the agreement, Sibanye will contribute US$490 million to secure a 50% interest in the lithium play, while ioneer will retain the remaining 50% and operator status.
The multi-million-dollar cash injection is enough to cover the project’s equity funding requirement, while the joint venture team will work together to secure debt funding in the future.
In addition to the US$490 million investment, Sibanye will pick up nearly 150 million INR shares under a US$70 million placement to fast-track construction activities at Rhyolite Ridge.
All in all, the funding runway will go a long way to developing what’s expected to be one of the first major lithium suppliers in the US.
Realising promise of Rhyolite Ridge
Speaking to the partnership, ioneer executive chairman James Calaway said: “We are extremely pleased to welcome Sibanye Stillwater, a leading international mining company, as a strategic partner in the Rhyolite Ridge Project.
“Sibanye Stillwater, with its proven track record of developing and operating major mining projects including operations in the United States, its commitment to developing and maintaining an inclusive and sustainable culture, and its determination to become a major force in the battery materials supply chain, is an excellent partner for ioneer to jointly realise the promise of Rhyolite Ridge.
“With a strong strategic partner in place, we can now look to finalise the debt financing for the project and move towards construction.
“We are confident in the alignment of our companies. Our partnership with Sibanye Stillwater will allow ioneer to unlock the tremendous, long-term value of Rhyolite Ridge.”
Some of Rhyolite Ridge’s key economics.
Joint venture implications
ioneer described Sibanye Stillwater’s appointment as “the culmination of an 18-month process” to find a strategic partner.
The international miner, which is listed on the New York and Johannesburg stock exchanges, boasts a market capitalisation of more than US$10 billion.
While the miner primarily deals in precious metals, it has invested in developing a lithium asset in Europe, where it owns a 17.3% stake.
Now, nearly half a billion dollars in funding is primed to fast-track Rhyolite Ridge’s development and help move it a step closer to production.
Ultimately, the funding runway accounts for as much as 60% of the estimated capital required for the lithium play under the definitive feasibility study.
Debt funding will cover the remaining costs to bring the project into production.
From here, ioneer plans to get Rhyolite Ridge construction-ready by the first half of 2022, complete financing six months later and celebrate its first product shipment in the second half of 2024.
ioneer considers its proximity to Tesla Inc (NASDAQ:TSLA)’s gigafactory one of the key selling points for its Rhyolite Ridge lithium-boron project.
The fine print
While both ioneer and Sibanye will own 50% of Rhyolite Ridge, their responsibilities will look very different.
For one, ioneer’s primary role remains project operator, meaning it will handle the lithium play’s development and move into operation.
The ASX-lister will also contribute 100% of the funding required to develop the asset’s South Basin, securing its 50% stake in the wider project.
Meanwhile, Sibanye will claim its interest via the $490 million direct funding investment.
However, it also has the option to participate in 50% of Rhyolite Ridge’s North Basin if it provides a further US$50 million in funding.
Of course, the joint venture agreement rests on a number of underlying conditions coming to pass.
Namely, these include securing final permits and commitments for debt financing and a series of other customary approvals.
Nevertheless, ioneer expects these to finalise over the second half of 2022.
The joint venture with Sibanye is not subject to shareholder approval, nor is it conditional.
Rhyolite Ridge’s roadmap to production.
US$70 million placement
Major miner Sibanye Stillwater is also primed to secure a shareholding in ioneer when it participates in a US$70 million placement.
The dual-listed company hopes to secure 145.9 million ordinary INR shares at A$0.655 apiece in exchange for the additional funding.
The placement price represents an 11.4% discount to the company’s closing price on September 15, but a 15.3% premium to the 30-day volume-weighted average price of A$0.57.
However, this raising exceeds ioneer’s existing placement capacity, so the company needs to secure shareholder approval for it to go ahead.
The company plans to undertake an extraordinary general meeting on October 21, where shareholders can vote to approve or scrap the placement.
Proposed use of funds from the US$70 million placement.
“Delivering a world-class project”
Speaking to the agreement with ioneer, Sibanye Stillwater CEO Neal Froneman said: “This is Sibanye Stillwater’s second lithium transaction and third transaction in the battery metals sector, which will be essential for the transition to a cleaner future.
“We are excited to build a long-term relationship with ioneer, who share our vision of facilitating security of lithium supply to the North American markets.
“Rhyolite Ridge is a world-class lithium project and we recognize its strategic value, with the potential to become the largest lithium mine in the US.
“We look forward to working collaboratively with the ioneer team and leveraging our complementary skills and capabilities to ensure this strategically important, world-class project is delivered and materially contributes to reducing climate change.”
Sibanye’s interest in Rhyolite Ridge is founded on these pillars.