$545 million lithium mine gets funding from Ford

184
3
$545 million lithium mine gets funding from Ford

A $545 million lithium mine in Western Australia has been approved for development after its owners, ASX-listed Liontown Resources, signed a deal with the US giant Ford Motor Company to supply the battery metal and back the project with a huge loan.

The approval for Kathleen Valley mine, 60 km north of Leinster in WA's Goldfields, follows the approval of $1.9 billion Mt Holland lithium mine near Southern Cross and a refinery in Kwinana last year.

The annual supply of 150,000 dry metric tons of spodumene concentrate will start from 2024, according to a deal between Perth-based Liontown and Michigan-based Ford.

It follows similar transactions with Elon Musk's Tesla and South Korean battery maker LG Energy Solution.

Ford will provide Liontown with a $300 million loan to help fund the project's development.

The company raised $450 million last year, so is well funded to cover the construction costs despite a $72 million blowout on initial estimates of $545 million.

In a statement to the ASX, Liontown's managing director Tony Ottaviano described the final investment decision by the board as just the beginning, and said the central task lies ahead to build and commission the mine.

He said that the signing of our third and final foundational offtake agreement is a momentous moment for Liontown and the Kathleen Valley project, with approximately 90 per cent of Kathleen Valley's start-up capacity now under secured long-term binding offtake agreements.

Kathleen Valley's status as a globally relevant lithium asset is evidenced by our disciplined approach to our offtake strategy.

In addition to the offtake, the $300 million funding facility from Ford, together with the capital raised last year, means that we have secured commitments for the funds needed to support the full commercial development of Kathleen Valley through to first production. Lisa Drake, Ford's vice president of electric vehicle industrialisation, said it was a significant deal for the car maker.

Ford is working on getting more deeply into the battery supply chain to meet our goal of delivering more than two million electric vehicles annually for our customers by the year 2026, she said.

Liontown told the ASX it had already placed orders for 73 per cent of long-lead items for the processing plant, worth an estimated $83 million.

The mining is expected to begin early next year to build up stockpiles of ore ahead of the commissioning phase.

Kathleen Valley is expected to produce about 500,000 tons of spodumene concentrate a year, with plans to expand to 700,000 tons in 2029.

It will add to the growing number of lithium mines in the WA, which includes the Greenbushes mine in the South West, the Pilgangoora and Wodgina mines in the Pilbara, Mt Cattlin near Ravensthorpe in the Great Southern, and the Mt Marion and Bald Hill mines in the Goldfields.

Mt Holland, a 50: 50 joint venture between Wesfarmers and Chile's SQM, is due to begin production in the second half of 2024.