As per the terms of the deal, Koch Minerals and Trading has agreed to pay $36.87 per share for buying 6.8 million shares of Compass Minerals, which translates to a stake of around 17%
Compass Minerals secures $252m investment from Koch for its lithium production project. (Credit: swm from Freeimages)
Koch Minerals and Trading (KM&T), a subsidiary of Koch Industries, has agreed to invest $252m in Compass Minerals to help advance a lithium development project in the US.
The investment will be made by buying the common stock of the publicly-listed Compass Minerals, which is engaged in providing essential minerals.
KM&T’s investment will be used for supporting the phase one development of Compass Minerals’ previously announced Great Salt Lake asset which is said to have a resource of 2.4 million metric tons (mMT) lithium carbonate equivalent (LCE).
Besides, the investment will help in reducing the debt of the mining company.
Compass Minerals president and CEO Kevin Crutchfield said: “We are pleased to welcome KM&T as our investment partner and look forward to leveraging their deep expertise and proven track record of building value.”
“Securing funding to aggressively pursue phase one of our lithium growth opportunity has been an important focus for our management team. This strategic investment will help drive our lithium project forward, strengthen our balance sheet and enhance execution capabilities across our entire platform.”
According to the terms of the investment agreement, Koch Minerals and Trading has agreed to pay $36.87 per share for 6.8 million shares of Compass Minerals. This will translate to a stake of around 17% in the mining company for Koch Minerals and Trading.
The first phase of the company’s lithium development project is anticipated to be advanced with about $200m of the proceeds from the investment. As per the company, the sum represents roughly 75% of the total phase-one funding requirements.
It includes the full funding needed through the year 2024 for the development of a commercial-scale direct lithium extraction (DLE) and lithium conversion plant at its solar evaporation facility in Ogden, Utah.
Compass Minerals foresees the project’s annual commercial production capacity to be nearly 35,000 metric tons (MT) of LCE. The company expects to commission an initial phase-one capacity of around 11,000MT of LCE by 2025.
By utilising the capabilities of Koch’s operating subsidiaries, the companies intend to explore value creation opportunities across the wider operational platform of Compass Minerals. These include the areas of supply and sourcing of fuel and raw materials, synergies in freight and logistics, and support for project engineering and development.
Koch Minerals and Trading vice president Jon Chisholm said: “KM&T seeks partners like Compass Minerals to apply its bulk commodity capabilities to create greater value for customers, communities and shareholders.
“KM&T will also be working closely with Compass Minerals and other Koch companies to unlock a significant lithium resource at Compass Minerals’ Great Salt Lake facility and become one of the first major U.S.-based lithium producers.”
The private placement of shares, which is subject to customary conditions, is anticipated to close in Q4 2022.