Liontown Resources Kathleens Corner and Mt Mann open pits have been sanctioned for DSO project execution, with 70,000 tonnes of DSO material stockpiled. The project aims for early revenue with a 250,000-300,000-tonne sale before concentrate production. Customer engagement is advanced.
Earlier today, Liontown Resources Limited (ASX: LTR) made public its decision to begin delivering Direct Shipping Ore (DSO) product to customers in order to generate income in advance of the start of concentrate production at the Kathleen Valley Lithium Project.
Liontown Resources made the announcement in January 2023 that mine plan optimisation work had uncovered the opportunity to free and potentially monetise extra material liberated from the updated mine plan. This additional material was not a component of the Ore Reserves and would have otherwise been stored if the opportunity had not been recognised. The company started with a study to find out if they were able to generate revenues early by selling a DSO product.
The company said, while performing a financial analysis, completing ore sorting test work, and interacting with potential offtake customers, Liontown has been stockpiling over 70,000 tonnes of DSO product since mining activities began in Q1 2023. As a result of the promising findings of the ore sorting tests, prospective customers have been given access to bulk samples.
Contract negotiations with prospective clients have progressed significantly. Before beginning concentrate production, Liontown Resources anticipates selling between 250,000 and 300,000 tonnes of DSO material. The choice to sell DSO after the initial concentrate has been produced will depend on market conditions and corporate strategy, the company went on to say.
The economics of the DSO prospect are quite attractive, and a sizeable amount of the mining expenses for the DSO material have already been sunk as development capital. This makes the opportunity very attractive. The crushing, screening, and sorting of the DSO material at Kathleen Valley will therefore begin in Q4 2023, per the terms of a contract between Liontown and Axis Mineral Services.
The most recent concentrate haulage contract with Qube Holdings Limited includes the option to transport the DSO product. This provided the opportunity to build and optimise transport operations well in advance of the first Spodumene Concentrate shipments, which are scheduled to begin around the middle of 2024.
Liontown Resources went on to say the DSO crushing and sorting project will supply vital real technical data to aid in the design of a prospective large-scale ore sorting circuit as part of the proposed 4Mtpa circuit extension.
In anticipation of the first production of spodumene concentrate from Kathleen Valley, Liontown plans to fully capitalise on the market demand for lithium DSO product. Liontown’s clients, which include automakers, battery companies, cathode suppliers, and refiners, continue to show strong demand for lithium.
Tony Ottaviano, Managing Director and CEO of Liontown, stated:
Liontown’s mining team has continued to optimise our mining plan, which has created the opportunity for early revenue through the sale of DSO. It illustrates the depth of our team and our commitment to realising the full potential of Kathleen Valley.
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 mid-2024.
