Investment to Advance Phase-One Development
of Company’s Well-Positioned, Sustainable North American Lithium
Brine Resource
Partnership Creates Opportunity for
Execution Synergies to Drive Value Creation Across the Entire
Compass Minerals Platform
Compass Minerals (NYSE: CMP), a leading global provider of
essential minerals, today announced that Koch Minerals &
Trading, LLC (KM&T), a diverse global trading, logistics and
investment company and subsidiary of Koch Industries, Inc. (KII),
has agreed to make a $252 million investment in Compass Minerals
through the purchase of Compass Minerals common stock to support
phase-one development of its previously identified 2.4 mMT lithium
carbonate equivalent (LCE) Great Salt Lake resource and debt
reduction.
“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,” said Kevin S. Crutchfield,
president and CEO. “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.”
Approximately $200 million of the proceeds from the investment
are expected to be used to advance the first phase of the company’s
sustainable lithium development project. This figure represents
approximately 75% of total phase-one funding needs, according to
the company’s FEL-1 level project cost estimates, including the
full funding required through calendar year 2024 toward the
construction of a commercial scale, direct lithium extraction (DLE)
and lithium conversion plant at the company’s Ogden, Utah, solar
evaporation facility. Compass Minerals expects the project’s annual
commercial production capacity to ultimately be approximately 35
kMT LCE, with an initial phase-one capacity of approximately 11 kMT
LCE coming online by 2025.
As part of the agreement, the companies will also explore value
creation opportunities across Compass Minerals’ broader operational
platform by leveraging the expansive capabilities of KII’s many
operating subsidiaries, including in the areas of supply and
procurement of fuel and raw materials, freight and logistics
synergies, and project engineering and development support.
“Koch Minerals & Trading is excited to partner with fellow
Kansas-based company, Compass Minerals, a leading producer of salt,
fertilizers and other essential products and materials. We admire
Compass Minerals for its values and its vision to produce products
that help keep people safe, feed the world and enrich lives.
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,” said Jon Chisholm, KM&T Vice President.
Compass Minerals expects to use the remaining $52 million of
proceeds from the KM&T investment, less transaction expenses,
to reduce debt, representing a significant step toward aligning the
company’s capital structure with its corporate growth strategy.
Key Transaction Terms
Under the terms of the investment agreement, KM&T has agreed
to purchase 6,830,700 shares of Compass Minerals common stock at a
price of $36.87 per share, resulting in proceeds to Compass
Minerals of $252 million. The issuance price represents a 6.2%
discount to the closing price and an 8.0% discount to the 5-day
volume weighted average price as of Sept. 13, 2022. The private
placement of shares is subject to the satisfaction of customary
closing conditions, including the expiration or termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 review. The private placement of shares is expected to
close in the fourth quarter of calendar year 2022, subject to the
satisfaction of customary closing conditions.
After the transaction closes, KM&T will own approximately
17% of Compass Minerals’ outstanding shares of common stock and
will have the ability to appoint two additional members to the
Compass Minerals board of directors.
Perella Weinberg Partners LP acted as sole financial advisor to
Compass Minerals in the transaction and Cleary Gottlieb Steen &
Hamilton LLP acted as the company’s legal advisor. Jones Day acted
as legal advisor for KM&T.
Lithium Strategy Update Call
As previously announced, an informational call will be held
Thursday, Sept. 15, 2022, from 8:30 a.m. to 10:00 a.m. ET to
provide an update on the results of the company’s ongoing
evaluation of development options and strategic path forward to
maximize the long-term value of its lithium resource. Participants
from Compass Minerals will include: president and CEO, Kevin
Crutchfield; head of lithium, Chris Yandell; senior vice president,
lithium commercial and technology, Ryan Bartlett; and CFO, Lorin
Crenshaw.
Access to the conference call will be available via webcast at
investors.compassminerals.com or by dialing 1-888-550-5768. Callers
must provide the conference ID number 3632674. Outside of the U.S.
and Canada, callers may dial 1-646-960-0469. An audio replay of the
conference call will be available on the company’s website.
About Compass Minerals Compass Minerals (NYSE: CMP) is a
leading global provider of essential minerals focused on safely
delivering where and when it matters to help solve nature’s
challenges for customers and communities. The company’s salt
products help keep roadways safe during winter weather and are used
in numerous other consumer, industrial, chemical and agricultural
applications. Its plant nutrition products help improve the quality
and yield of crops, while supporting sustainable agriculture.
Additionally, the company is pursuing development of a sustainable
lithium brine resource to support the North American battery market
and is a minority owner of Fortress North America, a
next-generation fire retardant company. Compass Minerals operates
12 production and packaging facilities with nearly 2,000 employees
throughout the U.S., Canada and the U.K. Visit compassminerals.com
for more information about the company and its products.
About Koch Industries Based in Wichita, Kansas, Koch
Industries, Inc. is one of the largest private companies in
America, with estimated annual revenues that have exceeded $125
billion. It owns a diverse group of companies involved in
industrial manufacturing, agriculture, building materials, glass,
automotive components, refining, renewable energy, chemicals and
polymers, pulp and paper, packaging, consumer products,
electronics, enterprise software, data analytics, medical products,
engineered technology, project services, recycling, supply chain
and logistics, global commodities trading, and investments. Since
2003, Koch companies have invested nearly $150 billion in growth
and improvements. With a presence in more than 70 countries, Koch
companies employ more than 120,000 people worldwide, with about
half of those in the United States. For more news and information,
visit www.KOCHind.com.
Koch Minerals & Trading, LLC, a subsidiary of KII, is a
diverse global trading, logistics, and investment company with over
500 employees and 1,000 customers in more than 50 countries.
KM&T has significant industry knowledge and experience in
stewarding businesses toward long-term value creation.
Forward Looking Statements and Other Disclaimers
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, statements about the company's
lithium brine development project; the KM&T investment;
synergies between the company and KM&T; ability to leverage
KM&T expertise and build value, progress the lithium project,
strengthen the balance sheet and enhance execution capabilities;
use of investment proceeds; project funding needs; construction of
a DLE plant; eventual LCE production capacity; value creation
opportunities; and whether, when and on what terms the KM&T
investment may be consummated. Forward-looking statements are those
that predict or describe future events or trends and that do not
relate solely to historical matters. We use words such as “may,”
“would,” “could,” “should,” “will,” “likely,” “expect,”
“anticipate,” “believe,” “intend,” “plan,” “forecast,” “outlook,”
“project,” “estimate” and similar expressions suggesting future
outcomes or events to identify forward-looking statements or
forward-looking information. These statements are based on the
company’s current expectations and involve risks and uncertainties
that could cause the company’s actual results to differ materially.
The differences could be caused by a number of factors, including
without limitation (i) weather conditions, (ii) inflation, the cost
and availability of transportation for the distribution of the
company’s products and foreign exchange rates, (iii) pressure on
prices and impact from competitive products, (iv) any inability by
the company to successfully implement its strategic priorities or
its cost-saving or enterprise optimization initiatives, (v) the
risk that the company may not realize the expected financial or
other benefits from the proposed development of its lithium mineral
resource or its investment in Fortress North America, and (vi)
impacts of the COVID-19 pandemic. For further information on these
and other risks and uncertainties that may affect the company’s
business, see the “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” sections
of the company’s Transition Report on Form 10-KT for the transition
period ended Sept. 30, 2021 and its Quarterly Reports on Form 10-Q
for the quarters ended Dec. 31, 2021, March 31, 2022 and June 30,
2022 filed with the SEC, as well as the company's other SEC
filings. The company undertakes no obligation to update any
forward-looking statements made in this press release to reflect
future events or developments, except as required by law. Because
it is not possible to predict or identify all such factors, this
list cannot be considered a complete set of all potential risks or
uncertainties.
The company has completed an initial assessment to define the
lithium resource at Compass Minerals’ existing operations in
accordance with applicable SEC regulations, including Subpart 1300.
Pursuant to Subpart 1300, mineral resources are not mineral
reserves and do not have demonstrated economic viability. The
company’s mineral resource estimates, including estimates of the
lithium resource, are based on many factors, including assumptions
regarding extraction rates and duration of mining operations, and
the quality of in-place resources. For example, the process
technology for commercial extraction of lithium from brines with
low lithium and high impurity (primarily magnesium) is still
developing. Accordingly, there is no certainty that all or any part
of the lithium mineral resource identified by the company’s initial
assessment will be converted into an economically extractable
mineral reserve.
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version on businesswire.com: https://www.businesswire.com/news/home/20220913006337/en/
Media Contact Rick Axthelm Chief Public Affairs and
Sustainability Officer +1.913.344.9198
MediaRelations@compassminerals.com Investor Contact Valerie
Tymosko Interim Senior Director of Investor Relations
+1.913.344.9496 InvestorRelations@compassminerals.com
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