Liontown awards $1bn Kathleen Valley contract

Liontown Resources has awarded a $1 billion underground mining services contract to Byrnecut as the market waits to hear whether it’s stretched the Kathleen Valley project budget.

The lithium project’s latest price tag was reported at $895 million but the market will have to hold out to see whether that's changed when Liontown reveals a final cost review of the northern Goldfields project.

The costly undertaking has already faced two cost blowouts since Liontown originally estimated it at $473 million, which was later lifted to $545 million before settling at its current price in January.

A combination of optimisation, additional scope and cost escalation were cited as reasons for the expected cost creep at the time.

But managing director Tony Ottaviano says the miner remains on track to reach first prosecution from Kathleen Valley by mid-2024.

Under the four-year contract valued at about $1 billion, Byrnecut will provide a full suite of mining services for underground operations to support initial plant throughput capacity to 3 million tonnes per annum.

The scope of work includes all aspects of underground construction, including early capitalised development and production across the Mt Mann and Northwest Flats orebodies.

The contract also covers early enabling works to Liontown’s planned 4 Mtpa expansion as part of its long-term operation of the underground mine.

Steve Coughlan-led Byrnecut will also commit $125 million to procure new plant and equipment to execute the works, set to commence development in the December quarter.

Mr Ottaviano said today’s contract award market a significant milestone for the Kathleen Valley contract.

“Our collaboration with Byrnecut has already delivered value in the form of the updated ‘one mine, two orebodies’ mine plan, which was optimized as an outcome of the tender evaluation process,” he said.

“At around $1 billion this is the largest contract to be awarded by Liontown and is reflective of operations requirements, external factors and the four-year duration.

“We remain on track for first production from Kathleen Valley by mid-2024 and I look forward to partnering with Byrnecut for the next stage of our project development.”

Last month, Liontown awarded a $175 million haulage contract to Qube Holdings to transport spodumene concentrate from Kathleen Valley to the Port of Geraldton.

The five-year contract also includes a provision for the haulage company to transport direct shipping ore product, which Liontown is planning to deliver to generate revenue ahead of first production in mid-2024.

In May, Liontown picked Iron Mine Contracting to deliver $240 million worth of mining services at the Kathleen’s Corner and Mt Matt open pits at the project.