The assistance should result in improved cash flow, supporting operational stability and improving project economics.

As part of this assistance, Liontown will receive a U$15M (US$9.6M) interest-free loan. Repayment will commence quarterly once the average price of lithium spodumene exceeds US$1,100/t for two consecutive quarters or by 30 June 2026—whichever comes first. Project Blue estimates that the US$1,100/t boundary set out in the support programme will not be met and instead the two-year period is the expected outcome.

Additionally, Liontown is eligible for a waiver on port charges and a rebate on certain mining tenement fees starting 1 January 2025. These concessions will apply for two years or until spodumene prices rise above the US$1,100/t threshold for two straight quarters.

Potential Impact:

Improved cash flow: The interest-free nature of the loan and deferred repayment schedule will enhance Liontown’s short-term liquidity, supporting operational stability during the ramp-up phase.

Cost reduction: A successful few quarters of ramping up has allowed Liontown to reduce cash costs significantly since their Q3 2024 start date. This reduction in cash cost can mostly be attributed to an increased throughput with higher recoveries, diluting fixed costs alongside tantalite concentrate sales. Waivers and rebates on port and tenement fees will further improve project economics. Project Blue calculates Kathleen Valley to be just breaking even in 2025 after being loss making in 2024.

Increased investment confidence: Government backing reinforces investor confidence in both Liontown and the broader lithium sector in Western Australia.

The entire programme was valued at A$150M (US$96.2M) and also included assistance with fees related to water, electricity and land for lithium hydroxide processors.

Project Blue believes that Liontown is the only mineral concentrate asset likely to benefit from the lithium industry support programme, with ramp ups limited to new developments within the first eight quarters of sales, therefore not including expansions. The Covalent JV has been revealed as the second entity and first processing facility to receive support from the package.

Project Blue also believes that the two-year timeline on the loan is the likely outcome and that US$1,100/t SC6 is unlikely to be realised for two consecutive quarters before June 2026.