Delta Lithium General Discussion, page-909

*Ditto Drumo, as

DSO move could have regional lithium players pondering a similar strategy

• Liontown Resources will sell direct shipping ore (DSO) from its Kathleen Valley lithium project ahead of concentrate production

• This is a well-established strategy taken by lithium luminaries such as MinRes, Pilbara Minerals and most recently Core Lithium who exported DSO as they were ramping up operations

• Delta Lithium plans to start DSO mining operations by the end of this year; Widgie Nickel has also lodged a Mining Proposal for DSO mining

The draw of early revenue has proven to be irresistible for market darling Liontown Resources, which has moved to deliver direct shipping ore (DSO) from its Kathleen Valley lithium project ahead of concentrate production.

In January, Liontown identified an opportunity to monetise additional material liberated from the revised mine plan that was not part of the Ore Reserve and would otherwise be stockpiled.

Since then, it has stockpiled about 70,000t of DSO product whilst undertaking a financial evaluation, conducting ore sorting test work and engaging prospective offtake customers.

With ore sorting achieving positive results and commercial discussions with potential customers well advanced, the company decided to sanction the project and expects to sell between 250,000t and 300,000t of DSO material prior to first concentrate production.

It has executed a contract with Axis Mineral Services for the crushing, screening and sorting of the DSO material from the fourth quarter while its recent concentrate haulage contract with Qube Holdings Limited included the flexibility to transport the DSO product.

As a further benefit, the DSO crushing and sorting program will provide the company with crucial real technical data to assist in the design of a potential large-scale ore sorting circuit as part of the planned 4Mtpa circuit expansion.

An established path to early $$$

Liontown isn’t the only company to sell DSO to fast track cashflows. It is following a well-established pathway taken by lithium luminaries such as MinRes, Pilbara Minerals and most recently Core Lithium who exported DSO as they were ramping up operations.

After all, while this ore typically contains around 1-2% lithium and fetches a lower price compared to the industry benchmark 6% spodumene concentrate, it is also relatively unprocessed and hence a lot cheaper and easier to produce.

Taken as an interim step while getting concentrate production up and running, it lets the company start filling in the cashflow column on their balance sheets sooner, which is always popular with shareholders – when done right.

Delta Lithium is already on the same path with plans to start DSO mining operations at its Mt Ida project by the end of this year.

While the project already has a resource of 12.7Mt at 1.2% lithium, Delta recently launched a 25,000m drill program across both Mt Ida and Yinnetharra further to the north.

Said drilling is already starting to bear fruit, returning assays such as 33m at 1.9% Li2O from Yinnetharra.

Meanwhile, Widgie Nickel has lodged a Mining Proposal for DSO mining at Faraday where exploration drilling to the north has unearthed the new Trainline near surface lithium prospect.

It noted in its June 2023 quarterly report that offtake discussions for the DSO product progressed positively during the quarter and are nearing the final stages.

Just a little further off

While the companies listed below have projects that are at a much earlier stage in their lives, the DSO plans that Liontown, Delta and Widgie have embarked on have almost certainly given them food for thought.



Food for thought on DSO & Delta down the track as the World wakes up to DLI

Cheers

Frank