Liontown Resources Limited (ASX: LTR) - Research Update

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KATHLEEN VALLEY RESOURCE UPGRADE DELIVERS
WORLD CLASS LITHIUM PROJECT
�� The updated Mineral Resource Estimate (“MRE”) for Kathleen Valley has delivered
a world-class Resource of 74.9 Mt @ 1.3% Li2O and 140 ppm Ta2O5, for 970 kt of
contained Li2O - this is a 353% increase in tonnes on the September, 2018 initial MRE
of 21.2 Mt @ 1.37% Li2O.
�� The Project is located over granted mining leases in a well serviced mining district
of Western Australia, the dominant producer of spodumene concentrates in the
Western World.
�� Kathleen Valley is highly ranked globally in terms of tonnage, grade and contained
lithium; it is also one of the largest Resources in terms of contained Li2O that is
either not currently supporting an operation or being developed.
�� The deposit compares very favourably with regards to size and/or grade to deposits
of current Australian mining operations, including (ranked on contained Li2O):
–– Mt Cattlin, Galaxy Resources - 16.7 Mt @ 1.28% Li2O, 210 kt Li2O,
–– Bald Hill, Alliance Mineral Assets - 26.5 Mt @ 1.00% Li2O, 270 kt Li2O,
–– Pilgangoora, Altura Mining - 50.5 Mt @ 1.01% Li2O, 510 kt Li2O),
–– Kathleen Valley - Liontown - 74.9 Mt @ 1.3% Li2O, 970 kt Li2O,
–– Mt Marion, Mineral Resources/Jianxi - 71.3 Mt @ 1.37% Li2O, 980 kt Li2O,
–– Wodgina, Mineral Resources/Albemarle - 236.9 Mt @ 1.20% Li2O, 2,820 kt Li2O,
–– Pilgangoora, Pilbara Resources - 226 Mt @ 1.30% Li2O, 2,870 kt Li2O; and,
–– Greenbushes, GAM - 120.6 Mt @ 2.4% Li2O, 2,890 kt Li2O.
�� Mineralisation, which outcrops and is fresh from surface, is open along strike and
down dip, and thus there is the potential for expansions with further drilling.
�� Importantly, preliminary metallurgical test work undertaken to date has produced
potentially saleable concentrates with grades of up to 6.2% Li2O, with this work,
including optimisation test work, ongoing - metallurgy is a key factor in the success or
otherwise of spodumene operations, and the ability to produce a +6% Li2O premium
concentrate has a significant effect on the revenue of any potential operation.
�� Activities are now concentrated on an ongoing Pre-Feasibility Study (“PFS”), which
will incorporate the recent results, and is due for completion by the end of 2019 - this
should see continuing positive news flow over coming months.
�� The success of the lithium strategy has seen Liontown’s market capitalisation
increase ~12-fold from ~A$14 million in early 2017 to A$161 million.
�� In summary, our view is that the results of work to date confirm Kathleen Valley as a
world class hard rock lithium project, and we expect positive news flow to continue
with ongoing activities.
IIR’S COMMENTS
Our view is that the release of the updated MRE (and the results of metallurgical test work
to date) for Kathleen Valley highlights the world class quality of the Project, and provides very
positive comparisons with the Mineral Resources of current operations and other advanced
projects.
Although some limited surface work has historically been carried out for pegmatite hosted
Li/Ta/Sn mineralisation on the tenements, Liontown was the first to target the pegmatites in
drilling, with an initial programme in 2017, and follow up programmes in 2018 and 2019, with
the results of work confirming the success of the Company’s lithium strategy.
The MRE (Table 1)is based on ~45,000 m of reverse circulation (“RC”) and ~4,500 m of diamond
drilling, and has defined a series of flat-lying to gently dipping parallel zones coalescing down
dip to the south-west - mineralisation is open along strike and down dip (Figures 1 and 2),
with the potential to increase the Resources with additional drilling. For further details of the
geology please refer to the Company’s release of July 9, 2019.
The Company has used two cut-off grades - 0.5% Li2O for potential open cut resources to
200 mRL (~300 m to 350 m depth), and 0.7% Li2O for potential underground Resources (below
200 mRL), with potentially open pittable Resources making up 93% of the total (Table 1).