Chinese battery maker headlines Pilbara lithium raise

Chinese lithium-ion battery manufacturer Contemporary Amperex Technology (CATL) will emerge as one of the biggest shareholders in Pilbara Minerals under a plan to raise up to $111.5 million (reports The Australian Financial Review).
6th September 2019
Resources Rising Stars

Chinese lithium-ion battery manufacturer Contemporary Amperex Technology (CATL) will emerge as one of the biggest shareholders in Pilbara Minerals under a plan to raise up to $111.5 million (reports The Australian Financial Review).

CATL will pay $55 million for 8.5 per cent of Pilbara, under a placement that effectively values the Western Australian lithium exporter at $646 million.

CATL makes electric vehicle batteries for car manufacturers like BMW, and is currently building a factory in Germany to supply BMW and other customers.

The Chinese company's involvement suggests large scale consumers of lithium still have an eye on the long term amid the current bear market for the battery mineral.

Pilbara will also seek to raise $36.5 million from institutional investors and $20 million from retail shareholders at 30¢ per share.

Pilbara shares last traded at 35¢ and have not traded at 30¢ since January 2016.

The raising plan, which is being assisted by Macquarie, comes a week after Pilbara decided not to proceed with a sale of a stake in the company's Pilgangoora mine because it believed the offers were too low.

Abandoning the sale process raised concerns about how Pilbara would fund itself beyond Christmas given very low lithium prices, reduced sales volumes and the fact the company's cash balance declined from $103 million to $63 million in the three months to June 30.

But Wednesday's raising plan seeks to allay those fears by buying Pilbara the time it needs to survive the downturn.

Chinese regulators and Pilbara shareholders will need to give their approval for the deal to proceed.

Sanford C Bernstein reported this week that global sales of electric vehicles fell 14 per cent in July; the first month fall in sales in history.

The slump was blamed on changes to electric vehicle subsidies in China; a factor repeatedly highlighted by lithium producers as hurting demand this year.

Prior to the raising Ganfeng was listed by Bloomberg as Pilbara's biggest shareholder with just over 8 per cent.

Chris Ellison's Mineral Resources Limited was listed as the second biggest holder with just over 6 per cent.

POSCO has just over 4 per cent of the company

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