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Yes very concerning - obviously we are in highly inflationary cycle and I don't think cost pressures will ease in the years that LTR are aiming for their highly ambitious mine/plant build and expansion.

Once first dirt is turned at LTR's project I am sure the costs will drive alot higher - there is alot of real-world labour and supply chain inefficiencies in the current market that will push costs up much further, which I do not believe is priced into LTR's costings.

This comes right back to the advantages WR1 is in - being a high grade, mid sized and nimble resource puts us very low on the Capex and Opex cost curve imho.

When Lithium margins are this good, or so called software like margins - we should aim to keep our Capex and Opex costs well down as its not a quantity game for this to be an insane cash cow even just producing Cancet DSO and moving into SC6 concentrate

Liontown said on Friday the project would now cost $895 million, inclusive of a $40 million contingency buffer.

It is the fourth time the project cost has blown out in three years, having risen to $325 million in October 2020,then $473 million in November 2021, before rising again to $545 million on the day Liontown announced the start of construction in June 2022.

The company said the cost blowouts were partly caused by increases to the scale of the project; originally planned to process 2 million tonnes of ore per year, the project will now be built to process 3 million tonnes.

But that 50 per cent increase in scale did not fully explain the near quadrupling of the cost, with Liontown saying the tight labour market in WA was a factor.

“Liontown has experienced substantial escalation in rates across all site-based labour-intensive contracts with some tenders experiencing price increases greater than 30 per cent,” said the company in a statement.

“In addition to market-wide price escalation, a reduction in both productivity rates of, and the number of contractors willing to bid, has also been evident impacting tendered package prices.”

Liontown expects to be selling lithium-rich spodumene concentrate to customers in the middle of next year and said part of the cost blowout was to ensure it kept to that schedule and was able to “take advantage of strong short and medium-term forecast lithium pricing”.

The cost blowout means pre-revenue Liontown may need an injection of funds before the end of this year.

Liontown’s WA project is thousands of kilometres away from the NSW Gunnedah Basin where Whitehaven Coal’s mines are based, but the inflationary pressures are very similar.

Whitehaven managing director Paul Flynn has resorted to building homes in the Gunnedah Basin to lure new staff, but said on Friday the labour market was still tough.

“I’ve seen comments from various participants in the industry saying that labour is perhaps moderating somewhat. We are not seeing the benefit of that I must say,” he told analysts on Friday morning.

“In fact everything we are doing in order to secure more labour does come at a cost so we see continuing inflation there in that area.”

Lithium miner Pilbara Minerals also announced a cost blowout of almost 40 per cent on one of its WA growth projects shortly before Christmas, but Pilbara has the luxury of covering that blowout with cashflows from its existing lithium mines.

Pilbara received $US5668 for each tonne of spodumene concentrate exported over the past three months; a far cry from mid 2020 when the same product was fetching closer to $US400 a tonne.

Pilbara’s mine production and export volumes have increased sequentially in each of the past three quarters and its cash balance rose by $851.1 million over the past three months to a total of $2.22 billion.

The cash balance would have risen by more than $1 billion in the quarter to $2.4 billion had bank letters of credit for shipments already delivered been included.

Pilbara’s strong financial performance means it will begin paying tax in February and will soon start earning franking credits.

Shares in Pilbara Minerals rose by more than 13 per cent on Friday to $4.55.

The stock traded as low as 15¢ in March 2020 but has since recovered on the back of strong electric vehicle sales numbers and soaring lithium prices.

The results continue a remarkable rise from obscurity for the company that was founded on TNG chairman Neil Biddle’s vision and built on former Atlas Iron boss Ken Brinsden’s operational know-how.