Liontown Resources locks-in offtake deal and debt facility with Ford, board greenlights Kathleen Valley development

Liontown Resources ASX LTR offtake deal debt facility Ford Kathleen Valley
Ford Motor Company will also provide a $300 million debt facility to help fund Kathleen Valley’s development through to first production.

Following a binding agreement with Tesla earlier this month, Liontown Resources (ASX: LTR) has revealed an offtake agreement with Ford Motor Company – prompting the board to approve development of its Kathleen Valley lithium project in Western Australia.

Earlier this month, Liontown announced Tesla had agreed to purchase 100,000 dry metric tonnes of spodumene from Kathleen Valley in its first year of production, with this to increase to 150,000t of the material annually for four more years.

This was followed up with this morning’s offtake announcement with Ford.

Ford will purchase 150,000tpa of spodumene from Kathleen Valley for five years – starting from 2024.

LG Energy Solution was the first company to ink a binding deal on similar terms to Tesla’s in May.

All up, Liontown now has 450,000tpa of spodumene concentrate tied-up in binding offtake agreements – representing 90% of its initial planned production.

Development of Kathleen Valley to begin

As well as its offtake commitment, Ford will also provide a $300 million debt facility to underpin the project’s development.

The car giant’s facility along with proceeds from a $463 million capital raising in December last year provide sufficient capital for Liontown’s board to make the final investment decision (FID) to develop Kathleen Valley.

“Announcing FID is a significant milestone and represents a major landmark for the project’s development,” Liontown managing director and chief executive officer Tony Ottaviano said.

“On the back of securing our third foundational off-taker 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.”

First spodumene concentrate is expected from Kathleen Valley in the June quarter of 2024, with manufacturing and site preparation works underway for the accommodation village.

A series of major contracts will be awarded for development and mining, with early grade control drilling “well-advanced”.

Pre-production mining is expected to begin in the first quarter of next year.

“Kathleen Valley is set to become a tier one second-generation lithium project, and I look forward to providing regular updates on our progress as we advance towards production in a systematic and measured way,” Mr Ottaviano said.

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