29/06/2022 - 11:37

Liontown lithium project a go

29/06/2022 - 11:37

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Liontown Resources will push ahead with its proposed Kathleen Valley lithium project after tying up its third and final offtake deal and a $300 million debt facility with Ford.

Liontown lithium project a go
Liontown managing director Tony Ottaviano said it was a milestone for the project. Photo: Matt Jelonek

Liontown Resources will push ahead with its proposed Kathleen Valley lithium project after tying up its third and final offtake deal and a $300 million debt facility with Ford.

Shares in the Perth lithium play were up over 6 per cent on the news that its board had reached a final investment decision to develop the project after lining up more than $760 million in funding.

Its decision comes seven months after laying down a definitive feasibility study for Kathleen Valley, outlining a 23-year operation based on what it claimed would be one of the largest lithium mines in the world.

Costs to build the project were estimated at $473 million at the time, though Liontown lifted that figure today to $545 million.

It said this was driven mostly by increases to the scope of work and higher costs in the sector.

Funding for the project will come in part from a major capital raising launched earlier this year on the back of the feasibility study.

Liontown managed to raise $450 million via an institutional placement and $12.9 million in a follow-up share purchase plan, albeit less than the $40 million it had sought.

A separate funding facility from Ford will lend Liontown $300 million to fund Kathleen Valley, with the global automotive also signing up as the third and final foundational offtake partner for the project.

Liontown will supply up to 150,000 tonnes of spodumene concentrate per annum for five years  once Kathleen Valley starts production.

It follows offtakes struck with South Korean battery giant LG Energy Solution and electric vehicle manufacturer Tesla.

Liontown managing director Tony Ottaviano said announcing a final investment decision was a significant milestone.

“On the back of securing our third foundational offtaker and favourable debt financing arrangements, the board has moved swiftly and decisively to make a FID, underscoring Liontown's collective determination to deliver Kathleen Valley as quickly as possible,” Mr Ottaviano said.

“Liontown’s central task lies ahead – safely building and commissioning our world-class Kathleen Valley Project.”

The company said it was progressing a series of major contracts relating to freight logistics, earthworks and open cut mining services with contractors.

“This process begins by immediately securing high-calibre contractors and business partners to ensure we can deliver the project safely and efficiently,” Mr Ottaviano said.

First production is expected in 2024.

Liontown shares were up 4.4 per cent at 1:06pm AEST to trade at $1.11.

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