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Liontown publishes a pre-feasibility study on the Kathleen Valley Lithium Project, but how does it compare to its peer group and the scoping study?

Liontown Resources has published a pre-feasibility study for its 100%-owned Kathleen Valley Igneous Lithium Project, located in Western Australia. The pre-feasibility study returned a post-tax NPV8 of A$507m and an IRR of 25%, but how does this compare to its peer group and the scoping study.

Liontown Resources - Liontown publishes a pre-feasibility study on the Kathleen Valley Lithium Project, but how does it compare to its peer group and the scoping study?

Liontown Resources Ltd (ASX:LTR) has published a pre-feasibility study for its 100%-owned Kathleen Valley Igneous Lithium Project, in Western Australia.

The pre-feasibility study returned a post-tax net present value (NPV8) of A$507mln and an internal rate of return (IRR) of 25%, which compares to a post-tax NPV8 of A$421mln and IRR of 38% from the scoping study of January 2019.

Average annual production of spodumene concentrate decreased by 18%, from 360,000t the scoping study to 295,000t in the pre-feasibility study, which means the operation would remain in the mid-range of its concentrate producing peer group for annual production levels.

The mine life has increased by 189%, from 9 years in the scoping study to 26 years in the pre-feasibility study, which gives the operation the third largest mine life of its concentrate producing peer group (Figure 1).

Figure 1: Life of Mine for Igneous Lithium Operations

spodumene igneous lithium deposits life of mineSource: Mining and Metals Research Corporation.

Over the life of the operation, Kathleen Valley will produce 7.7mt of spodumene concentrate, making it the fifth-largest concentrate producing operation, based on tonnes produced (Figure 2).

Figure 2: Life of Mine Production from Igenous Lithium Operations

spodumene igneous lithium operations life of mine productionSource: Metals and Mining Research Corporation

Opex net of tantalum credits increases by 6%, from US$362/t of spodumene concentrate to US$384/t, using the current AUD to USD exchange rate. This is the upper range of its concentrate producing peer group.

Capex has increased by 4%, from US$158m in the coping study to US$164m in the pre-feasibility study, which gives the project a life of mine capex intensity of US$21/t of spodumene concentrate and places it in the lower range of its concentrate producing peer group.

Liontown already has a mining lease in place and is targeting maiden production for 2024. The company now plans to move on to complete its definitive-feasibility study for the project.

 

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