LA Private

Liontown Resources moves to boost early revenue with Kathleen Valley DSO product

Liontown Resources (ASX:LTR) has taken a step to boost early revenue from its Kathleen Valley project in WA by reaching an agreement to deliver a direct shipping ore (DSO) product to potential customers.

In a statement to the ASX on Thursday, the company (which has rejected a takeover offer from the US giant, Albemarle) stated that it is seeking an early source of income before the commencement of first concentrate production from Kathleen Valley.

The company is in talks with potential customers with the goal of initiating sales by the end of 2023.

According to the company, a contractor and equipment have been secured to begin generating the DSO product, with “additional material liberated through mine plan optimization, not previously expected to be processed.”

Liontown revealed that approximately 70,000 tonnes of DSO material have been stockpiled by the end of July since the start of mining operations at the Kathleens Corner and Mt Mann open pits earlier this year.

The company aims for an initial sale of 250,000 to 300,000 tonnes of 1% grade (lithium) DSO before the commencement of first concentrate production.

“The economics of the DSO opportunity are compelling, with a substantial portion of mining costs for the DSO material already invested as development capital,” stated Liontown in Thursday’s announcement.

Consequently, Liontown has entered into a contract with Axis Mineral Services for the crushing, screening, and sorting of the DSO material at Kathleen Valley, set to commence in Q4 2023.

The recent concentrate haulage contract with Qube Holdings Limited includes the flexibility to transport the DSO product, providing an opportunity to establish and refine transport logistics well in advance of the first spodumene concentrate shipments from mid-2024.

Furthermore, the DSO crushing and sorting program will provide crucial technical data to assist in designing a potential large-scale ore sorting circuit as part of the planned four million tonnes per year circuit expansion.

Liontown remains optimistic about robust demand for lithium from its customers, including automakers, battery producers, cathode suppliers, and refiners, and aims to capitalize on the market demand for lithium DSO product ahead of the first production of spodumene concentrate from Kathleen Valley.

Liontown CEO, Tony Ottaviano, stated in the announcement, “As a lithium producer in a Tier-1 jurisdiction, we bring a distinct and reliable benefit to customers. Therefore, progressing with the production of DSO not only provides early revenue potential but also enables us to de-risk the project by field testing our ore sorting and logistics solutions on a smaller scale ahead of first concentrate production in mid-2024.”