Liontown details $473m lithium operation

Liontown Resources has detailed plans for what it claims will be one of the biggest lithium mines in the world, revealing a 23-year operation at Kathleen Valley in the Goldfields.

A definitive feasibility study for the project has revealed a 500,000 tonnes per annum operation expected to cost $473 million to build, with the Tim Goyder-chaired company planning a $66 million expansion in year six to deliver 700,000tpa.

That compares to an earlier initial production estimate of 350,000tpa and capital cost of $325 million, as per Liontown's prefeasibility study released in October last year.

The 23-year operation is based on ore reserves of 68.5 million tonnes at 1.34 per cent lithium oxide.

The DFS also revealed a significant increase in the project’s post-tax net present value, from $1.1 billion to $4.2 billion, based on an internal rate of return of 57 per cent.

Liontown expects to make a final investment decision before June 30 and start production in the first half of 2024.

The West Perth-based company described Kathleen Valley as a tier-one lithium operation that would become one of the world's largest producers of the battery material.

Managing director Tony Ottaviano said that, based on the initial production rate, Liontown would represent 5.7 per cent of the world spodumene market and 4 per cent of the lithium market (on an LCE basis).

“This is a major new Australian resource project, in a future-facing commodity, that we believe exceptional long-term returns for our shareholders, all of our other key stakeholders and the state of Western Australia," Mr Ottaviano said.

He noted Liontown would now finalise offtake and funding discussions for the project.

Separately, the company has released details of a $1.5 billion downstream processing refinery for its spodumene concentrate, capable of producing 86,000tpa of battery-grade lithium hydroxide monohydrate (LHM) on site.

Mr Ottaviano said the refinery was supported by Kathleen Valley’s long-life operation.

“It gives us an opportunity to expand our customer base beyond the normal customers that we’ll have as part of [being] a spodumene producer,” he said in a teleconference.

Liontown, which acquired Kathleen Valley from Ramelius Resources in 2016, also owns the nearby Buldania lithium project (acquired from Avoca Resources in 2018).

Mr Ottaviano said Liontown would look to Buldania and other established lithium projects to maximise the company’s full potential, as well as develop its internal expertise to become a bigger player in the battery minerals value chain.

“All this will be done with a mind of the circular economy, understanding how our resources come back through recycling,” he said, noting the company’s 60 per cent renewable energy target to reduce scope 2 emissions and plans to minimise water usage.

Liontown expects to release its first sustainability report before the end of the year.

Its shares were down 12.6 per cent this afternoon despite the company's positive sentiment about the studies, closing at $1.64.