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Liontown Resources, the ASX-listed lithium hopeful, is poised to announce a major offtake and funding agreement to get its flagship Kathleen Valley project off the ground.

In March, the $2.2 billion group said it put in place a $550 million debt facility with a syndicate of lenders including Commonwealth Bank, National Australia Bank, Société Générale and the Clean Energy Finance Corporation to get the mine away.

Sources said the company was close to announcing a major offtake and funding deal to replace those banks – with South Korean steel manufacturer POSCO said to be involved.

Of note, POSCO is close to billionaire Gina Rinehart, a major Liontown investor, although she is not believed to be involved. A company spokesman declined to comment. An announcement is expected on Tuesday.

Liontown entered a trading halt on Tuesday morning.

The debt deal in March came after the collapse of a similar, but larger agreement in October. That one was worth $760 million and stretched for at least seven years, and was put in place following the end of a $6.6 billion takeover proposed by Albemarle.

The start of mining at Kathleen Valley is unlikely to arrest Liontown’s cash burn, given the slump in lithium prices. The lithium-rich spodumene concentrate that Kathleen Valley will produce is fetching $US970.

Goldman Sachs estimates that the first year of production is expected to see unit costs closer to $US1278 a tonne.

As The Australian Financial Review reported last month, Citi is betting lithium prices will dive as much as 20 per cent over the coming months amid signs inventories of the battery material are rising at a “dramatic pace”.

The broker is recommending investors short the commodity following a 5 per cent plunge in Chinese carbonate futures to $US12,000 a tonne overnight, extending the lithium price decline to 15 per cent over the past month.