Downstream scoping study reveals upside at Kathleen Valley for Liontown
Special Report: Study finds favourable financial upside for integrated mining, processing and refining operation on-site.
A downstream scoping study has found the development of an integrated refinery at the Kathleen Valley lithium-tantalum project to be an attractive proposition for the production of either lithium hydroxide monohydrate (LHM) or lithium sulphate monohydrate (LSM).
Liontown Resources Limited (ASX: LTR) announced the results from the study in conjunction with a recent Pre-Feasibility Study (PFS), which demonstrated exceptional financial and economic returns would be generated from the addition of an on-site processing plant to produce battery-grade products.
David Richards, managing director at Liontown, said the company has “a unique opportunity to explore this scenario at Kathleen Valley, given the scale, grade and quality of our project and its location proximal to infrastructure, key logistics and supply chains in the North-Eastern Goldfields of WA.”
Lycopodium Minerals Pty Ltd were engaged by Liontown to evaluate the impact of integrating the mine, process plant and refinery at Kathleen Valley, otherwise referred to as the Integrated Project.
Lycopodium determined scoping-level operating and capital cost estimates (+/-30% accuracy) for a downstream facility capable of processing feed of approx. 380 kilo tonnes per annum (ktpa) 6.0% spodumene concentrate – producing either 58ktpa of battery-grade LHM or 88ktpa battery-grade LSM.
The findings produced a compelling statement that an integrated refinery had the potential to make Liontown a significant supplier of refined battery feedstock.
The Kathleen Valley lithium-tantalum project is 100 per cent owned by Liontown and is located on four granted and one mining licence application approximately 680km north-east of Perth.
The project is well positioned within a strong mining district and has rapidly emerged as a Tier-1 battery metals asset with excellent grade and scale. In May 2020, Liontown announced a third mineral resource estimate (MRE) upgrade in just 18 months with a finding of 156 million tonnes (Mt) at 1.4% lithium oxide (Li2O), establishing it as a world class lithium deposit.
That MRE upgrade led to the revised PFS, which was released earlier this month on October 9.
The updated PFS noted an increased ore reserve of 71Mt at 1.40% Li2O and 130 parts per million (ppm) tantalum pentoxide (Ta2O5), extending the life of the mine from an estimated 26 years to approximately 40 years.
The PFS also outlined stronger financial projections with estimates of net present value increasing to $1.12bn (up from $507m), internal rate of return increasing to 37% (from 25%) and a life of mine (LOM) free cash flow of $4.8bn (up from $1.9bn).
Liontown now feels set to proceed with a definitive feasibility study.
“Our primary objective now is to press ahead with the planned definitive feasibility study including further engineering and testwork associated with developing an integrated project at Kathleen Valley,” Richards said.
“We are delighted with the initial results of the downstream study and intend to continue to vigorously pursue ongoing engineering, marketing and funding efforts to bring the Kathleen Valley lithium tantalum project into production.”
The scope of the downstream scoping study related to the process design, capital and operating costs associated with an LHM or LSM refinery, but also derived some information from the PFS released earlier this month.
As part of the study, two whole-of-ore flotation (WOF) concentrator feed rates were evaluated (2Mtpa and 4Mtpa), but only results from the 2Mtpa option have been considered, in line with the PFS.
The options determined by Lycopodium’s evaluations were:
In order to progress the latest findings of this study, further considerable engineering is required to better estimate material quantities to the required level of accuracy. In addition, metallurgical test work using representative Kathleen Valley 6.0% spodumene concentrate will be necessary to confirm the studies-assumed recoveries, reagent consumptions and to validate equipment size, quantity and material selection.
Subject to board and funding approval and ongoing metallurgical and process engineering work, it is anticipated further development of the downstream scoping study will occur in the second quarter of 2021.
This article was developed in collaboration with Liontown Resources Limited, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.