Liontown Resources aims to bring Kathleen Valley online to meet next wave of lithium demand

Liontown Resources ASX LTR pre-feasibility study open pit lithium mine
Liontown Resources’ pre-feasibility study for Kathleen Valley estimates $1.94 billion in after tax free cashflow over 26 years.

A pre-feasibility study has confirmed the “robust” potential for Liontown Resources’ (ASX: LTR) Kathleen Valley project to become Western Australia’s next-generation lithium mine.

Underpinning the study is a maiden reserve of 50.4 million tonnes at 1.2% lithium, with forecast production estimated at 295,000t per annum of 6% spodumene concentrate.

The reserve is substantial enough to support a 26-year operation, with further growth expected from ongoing drilling.

Located in WA’s eastern goldfields, Liontown wholly-owns Kathleen Valley which is on granted mining leases in an establishing mining district.

The pre-feasibility study assumes capital expenditure of $240.5 million would be required to establish the operation, which would then generate life of mine after tax free cashflow of $1.94 billion – equating to $84 million annually.

Liontown managing director David Richards said these figures point to “strong financial returns” from the proposed 2Mtpa operation.

“It will allow us to move into a definitive feasibility study that will be based on an updated mineral resource and ore reserve that reflects the results of our ongoing drilling success and will also include other important project optimisations and enhancements.”

“Kathleen Valley has all the ingredients to underpin a world-call battery metals business that we believe will deliver substantial returns and value for our shareholders for many decades to come,” Mr Richards added.

Liontown has pencilled in first production at Kathleen Valley for 2024, which is when lithium demand is expected to surge again on the back of increased electric vehicle adoption world-wide.

Further upside potential at Kathleen Valley

Additional upside from the project can also be gleaned from sales of tantalum, where preliminary testwork reveals its potential to be recovered.

Liontown noted it would include the tantalum potential in the definitive feasibility study.

Also, Liontown pointed out mineralisation at Kathleen Valley extended “well beyond” the current resource and could potential support an underground operation to expand annual production.

“This high-quality pre-feasibility study builds on the scoping study completed earlier this year,” Mr Richards said.

“It provides investors with a snapshot of what we are confident will be the first of a new generation of hard rock lithium projects times to benefit from the next wave of lithium demand.”