- EUR 350m fundraise could include debt component
- IPO plans cancelled, could reassess in future
Keliber, the Finnish lithium hydroxide company, is preparing a EUR 30m fundraise for September, with a view to raising cEUR 350m in 2022, CEO Hannu Hautala told Mergermarket.
The EUR 30m fundraise will enable it to complete the planning and permitting of a lithium mine and concentrator in Kaustinen, Finland, and a factory in Kokkola port, Hautala said.
Keliber has hired an advisor for the fundraise but Hautala declined to name “the large international” firm as the contract is yet to be signed. The advisor has, however, started prep work and the mandate will be official in the coming few weeks, he said.
It plans to complete the fundraise by November, Hautala said.
The company is looking for international investors who are willing to come on board with a view to reinvesting in the next funding round, he said. So far, it has been in touch informally with a handful of potential investors in Hautala’s own network, and has received positive feedback from those, he said. He declined to give further details on the potential investors. Whether existing investors will reinvest, selldown their stakes or exit, is not yet clear, he said.
More than 80% of Keliber is owned by Finnish institutional and private investors, Hautala said. The largest individual owners are Finnish Minerals Group (c25%), Norwegian mining industry investment company Nordic Mining (c16%), Jorma Takanen (c10%) and Australia-based Mine Invest, he said.
It is too early to say how much equity will be offered through the funding round, Hautala said, adding that Keliber is working together with the advisor to evaluate the business. It is assessing the valuation on the basis of an IRR of 22%, project payback time of 4.8 years, and net present value of EUR 397m, he said.
Keliber raised EUR 6m in a directed share issue to existing shareholders in March, when investors paid EUR 33 per share, Hautala said, adding that since then, Keliber’s IRR and other metrics have improved. To date, the company has raised a total of cEUR 43m, Hautala said.
The cEUR 350m fundraise will finance the building phase, planned to start in July 2022, he said. Part of the EUR 350m is likely to be debt financing, he said without elaborating.
Approximately EUR 100m will be needed for the building of the concentrator and about EUR 100m for the factory, with the remaining cEUR 150m to be used for the opening of the mines, infrastructure, and small buildings, such as water and power plant, as well as project management costs and working capital, he said.
Keliber has 17 employees but will need approximately 200 once it begins production, he said.
Keliber does not yet have revenue but forecasts cEUR 200m annual revenue and EUR 100m – EUR 130m EBITA from 2025 onwards, Hautala said.
According to Roskill Information Services, a metals, minerals and chemical industries research and consulting agency, the demand for lithium hydroxide will increase between 30ktpa and 50ktpa from 2025 onwards, Hautala said. Once up and running, Keliber’s annual production capacity will be 15ktpa, he said.
The company already has contacts with 10-15 potential customers, mainly electric vehicle makers, with the electric vehicle market presenting the biggest growth opportunity for lithium hydroxide, he said.
Keliber is the most advanced lithium hydroxide project in Europe, according to Hautala. Currently, most of the sold lithium comes from China, Brazil, Chile and Australia, he said, adding that COVID-19 is highlighting the need to build European capacity.
Lithium is not found in many places in sufficient content. In Europe, there are other earlier stage projects in Spain (Infinity Lithium’s San Jose Industrial Lithium Project), Portugal (Savannah Resources’ Mina do Barroso Lithium Project), and the Czech Republic (European Metals’ ) lithium/tin project in Cinovec) but they are less advanced compared to Keliber, he said.
Keliber was preparing for a potential IPO last year but this plan is no longer on the agenda, Hautala, who joined the company in March, said. Carnegie and Nordea were advising the company at the time, as reported. The market environment is not right for an IPO and the company is not willing to change its structure to that of a publicly traded company, at least not for now, he said. However, it has not completely ruled out the option of an IPO in the future, he said.
The company was established as Keliber Resources in 2001 and started trading as Keliber in 2007. Since inception, the company has focused on developing the manufacturing process of lithium together with mining equipment company Outotec and state-owned The Geological Survey of Finland (GTK), and on assessing the financial feasibility of the mining project, Hautala said.
It published a definitive feasibility study on the production of lithium carbonate in 2018 but changed its plan to start producing lithium hydroxide in 2019 (updated study published) as lithium hydroxide is the most suitable raw material for electric vehicle batteries, Hautala said.
Lithium hydroxide is a vital component in batteries, such as used for mobile phones and electric vehicles.
by Auri Aittokallio in London