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Early Direct Shipping Ore (DSO) cashflow plan for Liontown.

“The economics of the DSO opportunity are compelling, with a substantial portion of mining costs for the DSO material already sunk as development capital.”

Tony Ottaviano, 

Chief Executive

Liontown Resources.

Liontown Resources is proceeding with delivery of direct shipping ore (DSO) as an early source of revenue before achieving first concentrate production at its Kathleen Valley lithium project in Western Australia next year. This has been sanctioned with the project contractor. 

About 70,000 tonnes of DSO material was stockpiled to the end of July following a start to mining operations at the Kathleen’s Corner and Mt Mann open pits earlier this year. 

Liontown is targeting early revenue with an initial sale of between 250,000 to 300,000 tonnes of DSO ore grading about 1% lithium prior to first concentrate production. The chosen DSO customer will be announced in the near future. Ore sorting test work has achieved positive results and prospective customers have been provided bulk samples for testing. 

“Commercial discussions with potential customers are well advanced,” the company said. 

Chief executive Tony Ottaviano told Diggers & Dealers Forum the company “is powering to production and that recent achievements reinforce the commitment to realising the full potential for Kathleen Valley.” 

The compny is on track to award its most significant contract – for underground mining services – which was on schedule this quarter along with the structural and mechanical piping contract. 

“The economics of the DSO opportunity are compelling, with a substantial portion of mining costs for the DSO material already sunk as development capital,” said Mr. Ottaviano. 

He told delegates that in the past year Kathleen Valley had transformed from a cluster of caravans to permanent accommodation facilities and a start to mining and also with the company having to fight off a takeover bid. 

Liontown has executed a contract with Axis Mineral Services for the crushing, screening and sorting of DSO material at Kathleen Valley, to start in the December quarter. 

The recent concentrate haulage contract with Qube Holdings included the flexibility to transport DSO product to help establish and refine transport logistics in advance of the first concentrate shipments in mid-2024. 

Through an agreement with Sumitomo of Japan, Liontown is now looking at options for downstream processing in Australia and Japan. The parties are exploring intermediate and finishing plant options. 

Key questions for Liontown in looking ahead on downstream processing are whether this would be robust through all the metal price cycles, whether it maximises value and whether it will give some market optionality. A strategic review with engineering firm Hatch on these options is underway and Sumitomo will be given oversight on this. 

Ottoviano said Kathleen Valley had two orebodies, each with their own declines that can produce a collective four million tonnes per annum of ore.  

Advancing funding options take in government export bank financing, bank financing and customer financing. For the export bank option financing letters of support have been received from Australian, Korean and US export credit agencies, while with bank financing lending syndicates are now undertaking due diligence. He said the funding option to be accepted would cover the balance of total development cost. 


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