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Kathleen Valley lithium project DFS (November 2021)

Reserves: 68.5mt @ 1.34% Li2O and 120 ppm Ta2O5
Throughput: 2.5 mtpa (increasing to 4 mtpa)
Production: 511,000 tpa SC6 spodumene concentrate,
428,000 tpa tantalum concentrate
Life-of-mine: 10 years
Capex: $473 million
AISC: $US452/dmt
NPV: $4.2 billion
IRR: 57%
Payback: 2.3 years

ing global lithium scene. ing early 2023 for first
The November 2021 DFS stamped a production but if they
$4.2 billion post-tax NPV on Kathleen Valley are not turning earth in
based on capex of $473 million and AISC early 2022 they won’t
of $US452/dmt. That study was based on happen,” he said. “The
an average spodumene concentrate (SC6) problem is threefold; ac-
price of $US1,287/dmt but with SC6 supply cess to equipment is a
tightening amid increasing demand, several global problem with 60
banks are already changing their forecasts. weeks delivery for SAG
In November, UBS increased its long- mills and other long-
term forecast for SC6 to $US1,800/dmt lead and approvals are
while established Australian producer Pil- a challenge. People
bara Minerals Ltd received a price equiva- in the Western world Liontown chairman Tim Goyder (near)
lent to $US2,629/dmt through its online want EVs, but they don’t want mines in their and managing director Tony Ottaviano
auction platform in the same month. backyard – look at the opposition to Rio Tin- discuss project development options at
The price increases of 2021 are set to be to Ltd’s Jadar project in Serbia. Thirdly, you Kathleen Valley
repeated in 2022 as the global EV rollout can’t underestimate the technical capacity
gathers pace, placing strain on battery sup- needed to run lithium plants and there is a
ply chains. While there is excess capacity worldwide shortage for all skills.” Resources Ltd/Ganfeng were forced to put
further downstream, lithium supply at the The last point is particularly pertinent their projects in Western Australia on hold
mine gate is constrained. given the recent failures in the lithium sec- due to soft commodity prices.
Ottaviano doesn’t expect the situation to tor. While Pilbara eventually overcame its Ottaviano is confident Liontown can
change in the coming 18 months despite a teething problems, neighbour Altura Min- benefit from not being a first-mover in the
plethora of proposed developments. ing succumbed to ramp-up failures and lithium space.
“There’s a number of companies call- the likes of Wesfarmers Ltd/SQM, Mineral “Before joining Liontown, I did a lot of due
diligence on the other companies in the sec-
tor, reading the administrators reports from
Altura to learn lessons,” he said. “The first
thing that stood out was ‘do your testwork’.
I understand the need for speed to market
but you can’t necessarily sort out problems
later. Not all ores are created equal and it’s
not enough to rely on the flowsheet from
Greenbushes which is the highest quality
orebody in the world.
“Secondly, you must enter into the right
offtake agreements and diversify by geog-
raphy and position in the value chain. Cur-
rently, convertors are extracting more rent
than miners because of poor pricing mech-
anisms. Mining is high risk and it requires
higher returns so should have the biggest
margins in the chain.”
The changing demand scenarios are
also playing into Liontown’s hands as it be-
gins marketing its Kathleen Valley product.
“Previously, if customers committed to
prepayment it was at a discount so was
crippling cashflow,” Ottaviano said. “Now,
the market is so hot customers are offering
Spodumene mineralisation on the ground at Kathleen Valley

aUSTRaLIa’S PaYDIRT FeBRUaRY 2022 Page 17