Commodities, Finance, Lithium, News

Liontown roaring as Kathleen Valley clears final hurdle

Liontown Kathleen Valley

Liontown Resources is poised to become Australia’s next lithium producer after a final investment decision was made on the Kathleen Valley lithium project in Western Australia.

It comes after Liontown executed its third and final foundational offtake agreement with Ford Motor Company, which followed on from similar agreements with Tesla and LG Energy Solution.

Liontown will supply Ford with up to 150,000 dry metric tonnes (dmt) of spodumene concentrate from Kathleen Valley across an initial five-year term.

With a start-up production capacity of approximately 500,000dmt, 90 per cent of Kathleen Valley’s output has now been committed to offtake partnerships.

Ford has also established a $300 million debt facility with Liontown, which complements the proceeds raised via the miner’s $463 million capital raise in December 2021.

In the process of securing funding for Kathleen Valley and conducting front-end engineering design (FEED) activities, Liontown has revised the project’s capital cost estimate, with the $473 million projection from the 2021 definitive feasibility study (DFS) increasing to $545 million.

“The increase is driven primarily by optimisation and expansion of the FEED scope across a range of areas and general cost escalation,” the company said in a statement.

“The variations to the FEED scope will improve the project’s operational flexibility and include adjustments that, while increasing capital, are expected to deliver positive improvements on the project’s process control and operating costs over the life of the project.”

The capital cost estimate remains consistent with the 15 per cent +/- accuracy tolerance Liontown suggested in the 2021 DFS.

In preparation for project delivery, the Perth-based miner continues to progress a series of major contracts – including engineering, procurement and construction management, a power purchase agreement, freight logistics, bulk earthworks and open cut mining services – with established and high-quality contractors.

With pre-production mining set to commence in the first quarter of 2023, Liontown forecasts first spodumene concentrate production in the second quarter of 2024.

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