Definitive study values Liontown's Kathleen Valley lithium project at A$4.2B

Liontown Resources Ltd. said Nov. 11 that a definitive feasibility study on the Kathleen Valley lithium-tantalum project in Western Australia defined a A$4.2 billion net present value, discounted at 8%, a 57% internal rate of return, and a 2.3-year payback period.

The study optimized the mine schedule, process plant design and forecast sales pricing to enhance the technical and financial viability of a stand-alone operation with base production of 2.5 million tonnes per year producing about 500,000 t/y of spodumene concentrate. In the sixth year, the operation is planned to expand to 4 Mt/y, delivering about 700,000 t/y of spodumene concentrate.

An ore reserve estimate of 68.5 million tonnes grading 1.34% lithium oxide and 120 parts per million of tantalum pentoxide, which supports an initial 23-year mine life, was used as the base of the study, together with a weighted average free on board spodumene price of US$1,392 per tonne.

The initial project capital cost is pegged at A$473 million, including A$107 million in pre-production costs, while the subsequent 4 Mt/y expansion is pegged at A$66 million.

Free cash flow from the operation over the life of mine is estimated at A$12.2 billion, with all-in sustaining costs in the first 10 years of US$452 per dry tonne.

Meanwhile, an updated downstream scoping study for Kathleen Valley confirmed a staged-build, integrated mining, processing and refining operation on the production of battery-grade lithium hydroxide monohydrate maximizes value.

The scoping study for the integrated 29,000-t/y operation outlined a net present value of A$9.6 billion, discounted at 8%, with a 56% internal rate of return. Capital expenditure is estimated at A$2.0 billion.

Liontown CEO Tony Ottaviano previously stated the company is fast-tracking the Kathleen Valley project on the back of a lithium supply shortage.