PERTH (miningweekly.com) – An updated prefeasibility study (PFS) into the Kathleen Valley lithium/tantalum project, in Western Australia, has increased both output expectations and the project’s capital return expectations.

A 2019 PFS had initially estimated that the project would require a capital allocation of A$240.5-million to develop a two-million-tonne-a-year mining and processing operation.

The study found that the project would have a mine life of 26 years producing at an average rate of 295 000 t/y of more than 6% spodumene concentrate, delivering a post-tax net present value (NPV) of A$507-million and an internal rate of return (IRR) of 25%, with the pay-back period estimated at four years post production.

However, an updated PFS released on Friday found that the project could support the production of 350 000 t/y of 6% spodumene concentrate production, along with 430 000 t/y of tantalum production, with the mine life now estimated at around 40 years, based on a throughput rate of two-million tonnes a year.

The updated PFS estimated a capital cost of A$325-million, with the project expected to have a post tax NPV of A$1.12-billion and an IRR of 37%, with a pay-back period of three years. Life-of-mine (LoM) cashflows have been estimated at A$4.8-billion.

The LoM cash operating costs have also decreased from around $406/t estimated in the initial PFS, to around $377/t.

The updated study was based on an ore reserve estimate of 71-million tonnes grading 1.4% lithium oxide and 130 parts per million tantalum pentoxide.

“The completion of the new PFS marks a major step towards Liontown becoming a substantial Australian lithium producer, demonstrating the benefit of taking an optimised, second-mover approach to large-scale spodumene production,” said Liontown MD David Richards.

“Our larger resource and higher grades, combined with promising metallurgical testwork and re-worked, more selective mining methods, have provided the foundation for the project to be significantly enhanced.

“Key points of difference from the December PFS include the adoption of a whole-of-ore flotation process flowsheet, a tantalum recovery circuit and the incorporation of higher-grade underground ore.

“The combined impact of these innovations is clearly reflected in the exceptional financial returns outlined in the 2020 PFS, which has delivered major increases in ore reserves, mine life, project net present value, internal rate of return, and payback, while importantly, lowering project unit costs.”

Richards said the updated PFS provided Liontown with a strong foundation to start a definitive feasibility study in the fourth quarter of this year.