Liontown Resources Limited announced that it has taken a major step towards the development of its Kathleen Valley Lithium Project in Western Australia after executing its first binding offtake term sheet with LG Energy Solution Ltd. (LGES). The agreement with LGES is for the supply of up to 150,000 dry metric tonnes (DMT) per annum of spodumene concentrate produced at Kathleen Valley expected to commence in 2024, representing approximately one-third of the Project's start-up SC6.0 production capacity of ~500ktpa. Liontown has been disciplined in executing its offtake strategy for Kathleen Valley, targeting large foundation agreements which aim to deliver diversification both by geographic location and customer position in the global battery value chain, while at the same time retaining some capacity to sell into the rapidly growing spot market.

The Company continues to receive very strong interest from a range of parties in long-term offtake from the Kathleen Valley Lithium Project. The Offtake Term Sheet with LGES is the first offtake arrangement secured for Kathleen Valley and represents a significant milestone for Liontown and its offtake strategy. As outlined in the Definitive Feasibility Study (DFS) completed in November 2021, Liontown expects first production from Katheen Valley in second quarter of 2024 with initial base production of 2.5Mtpa delivering ~500,000tpa of spodumene concentrate.

Supply of spodumene concentrate under the Offtake Term Sheet represents approximately 30% of annual production after Year 1. Under the Offtake Term Sheet, pricing is determined by a formula-based mechanism linked to market prices for Lithium hydroxide. Using January 12, 2022 market pricing for Lithium hydroxide, the contract terms would deliver an SC6.0 price outcome for Liontown that is greater than the pricing assumptions used in the DFS. Notwithstanding this, investors should note that the pricing received by Liontown under the Offtake Term Sheet will be determined by market prices at the time of each shipment.

Liontown and LGES will now work together to enter a definitive full form binding offtake agreement. Liontown is continuing to progress negotiations with other potential Tier-1 global customers which would complement its off-take strategy. Material terms of Offtake Term Sheet: Parties: LRL (Aust) Pty Ltd. (a wholly owned subsidiary of Liontown Resources Limited) (Seller) and LG Energy Solution Ltd. (Buyer).

Offtake Agreement: Parties to negotiate in good faith to enter a definitive full form offtake agreement no later than 28 February 2022 (unless extended). The Offtake Term Sheet will terminate upon the earlier of execution of the offtake agreement or 31 March 2022 (unless extended or terminated by mutual agreement). Supply Term: 5 years from commencement of commercial production to supply.

Buyer may terminate the offtake agreement if commercial production has not occurred prior to 30 June 2025 (Supply Term). Extension: The Supply Term may be extended for a further 5 years by mutual agreement. Product: Spodumene Concentrate with target specification 6% Li2O.

Quantity: The Seller has agreed to supply and the Buyer has agreed to take: Year 1 ­ 100,000 DMT (+/- 10%), Years 2 to 5 ­ 150,000 DMT (+/- 10%) Pricing: Pricing is based on market prices for Lithium Hydroxide Monohydrate. Payment: Irrevocable letter of credit. Suspension Rights: The Seller shall be relieved of its obligation to supply Product when the Project is under force majeure or placed on care and maintenance on commercially reasonable grounds.

Greenhill & Co is acting as financial adviser and Allens is acting as legal adviser to Liontown.