By Rhiannon Hoyle
Liontown Resources on Friday said the Kathleen Valley lithium project in Australia will cost more than expected to build, and that it plans to stockpile ore it previously intended to sell ahead of first concentrate production there due to weak market prices.
Liontown, which is a takeover target of U.S. chemicals company Albemarle, said it now expects to Kathleen Valley lithium project to cost 951 million Australian dollars (US$611 million), up from a January estimate of A$895 million and a 2021 estimate of A$473 million.
Chief Executive Tony Ottaviano said the company, which also published updated operating cost estimates, is facing “one of the toughest markets to construct and operate seen in recent years.”
Liontown also said it intends to sort the direct shipping ore is previously wanted to sell as an early source of revenue and add it to its own stockpile to be processed in future. “However, the company retains the option to sell this DSO material if market conditions improve,” it said.
The company is well advanced in talks with a lender syndicate of commercial banks and government credit agencies to get the funding it needs to complete the project, said Liontown.
“Albemarle continues to progress due diligence as previously announced and has been provided the updated estimates of project capital cost and operating costs,” Liontown said.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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