Liontown Resources : Positive Downstream Scoping Study - Kathleen Valley

22nd October 2020

Downstream Scoping Study

Kathleen Valley Lithium-Tantalum Project

Integrated Refinery shows exceptional economics from

production of battery-grade products

New Scoping Study reveals further development upside for Kathleen Valley

Highlights

• Downstream Scoping Study (DSS) completed, leveraging off the recent Pre-Feasibility Study (PFS) on Liontown's 100%-owned Kathleen Valley Lithium-Tantalum Project in WA.
• DSS demonstrates the very favorable financial upside of an integrated mining, processing and refiningoperation based on the production of either Lithium Hydroxide monohydrate (LiOH.H2O "LHM") or Lithium Sulphate monohydrate (Li2SO4.H2O "LSM") using 6% Li2O Spodumene concentrate (SC6.0) as feedstock from Kathleen Valley.
• Forecast average steady-state production of 430tpa tantalum (Ta2O5), unchanged from the PFS.

Scoping Study Outcomes (1)

	PFS + LHM	PFS + LSM
	Refinery	Refinery
Post-taxNPV8% (real, post-tax)	A$4.8 B	A$3.2 B
Internal Rate of Return (IRR) %	41%	35%
LOM Free Cash-flow(post-tax)	A$19.5 B	A$13.7 B
Payback period (Years - Integrated projects)	3	3
Average LOM cash operating costs (US$/t) (2) (6)	US$4,744	US$2,649
Total CAPEX (SC6.0 Plant + Refinery) (3) (4) (5) (7)	A$1.1 B	A$0.9 B
Design production rate	58 ktpa (LHM)	88 ktpa (LSM)
Average steady state production	430 tpa (Ta2O5)	430 tpa (Ta2O5)
Life-of-mine (LOM) years	~40 years	~40 years

Cautionary statement: 1The production targets and forecast financial information referred to in the DSS are based on Proven Ore Reserves (19.7%), Probable Ore Reserves (69.8%) and Inferred Mineral Resources (10.5%). The Inferred material included in the inventory is 8.28Mt

• 1.36% Li2O & 120 ppm Ta2O5. The Inferred material has been scheduled such that less than 1Mt is mined in the first ten years, with 6.44Mt at the end of the underground mine life and 0.84Mt after year 25 for the open pit.

The Inferred material does not have a material effect on the technical and economic viability of the project. Refer to page 21 of PFS announcement released on 9th October 2020 for additional information.

There is a low level of geological confidence associated with inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of indicated Mineral Resources or that the production target itself will be realised.

1. Cash operating costs include all mining, processing, downstream refining, transport, state & private royalties, freight to port, port costs and site administration and overhead costs. Excludes sustaining capital.
2. Integrated Capex for LHM production includes $325M for the mine/ SC6.0 processing plant (PFS) and $785M for the downstream refinery
3. Integrated Capex for LSM production includes $325M for the mine/ SC6.0 processing plant (PFS) and $625M for the downstream refinery
4. SC6.0 plant capital to PFS level +/-25% accuracy, DSS to +/-30% accuracy
5. PFS included no contingency on SC6.0 operating costs, DSS included no contingency on operating costs
6. PFS included 15% ($27M) capital contingency, DSS included 20% ($135M LHM & $109M LSM ) contingency on capital costs

8LHM Pricing per Roskill price estimates, LSM pricing scaled based on Roskill LHM price estimate (Sept. 2020)

The scope of the DSS relates solely to the process design, capital and operating costs associated with an LHM or LSM refinery, however the financial analysis also uses information published as part of the PFS released on 9th October 2020.

Liontown Resources Limited (ASX: LTR; "Liontown" or "Company") is pleased to announce the results of a Downstream Scoping Study (DSS) for its 100%-ownedKathleen Valley Project in Western Australia which demonstrates the exceptional financial and economic returns that would be generated by the addition of an on-site, downstream processing plant to produce battery-grade products.

The recently published PFS, which was announced on 9th October, included an Ore Reserve of 71Mt @ 1.40% Li2O and 130ppm Ta2O5 and a Production Inventory of 79Mt@ 1.4% Li2O & 130 ppm Ta2O5 which underpins a 2Mtpa mining and processing operation over a ~40-year mine life.

Building on the PFS, Liontown engaged Lycopodium Minerals Pty Ltd (Lycopodium) to evaluate the impact of integrating the mine, process plant and a downstream refinery (Integrated Project) at Kathleen Valley to produce either battery-grade LHM or LSM based on the projected SC6.0 production.

Lycopodium determined scoping-level operating and capital cost estimates (+/-30% accuracy) for a downstream facility capable of processing feed of ~380ktpa SC6.0 spodumene concentrate to produce 58ktpa of battery-grade LHM or 88ktpa LSM on-site at Kathleen Valley.

As the financial analysis demonstrates, an Integrated Project is an attractive proposition, given the location of the Project relative to key infrastructure including power and gas, the supply of key consumables such as acid from the nearby mining and logistics centre of Kalgoorlie and, importantly, having a suitable area for tailings. Operating cost savings are also applicable through significantly reduced transport volumes of final product.

The DSS has provided a strong basis for further work illustrating the robust fundamentals and compelling economics of a downstream refinery at Kathleen Valley. The Integrated Project has the potential to make the Company a significant supplier of refined battery feedstock.

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Liontown's Managing Director, David Richards, said:

"Downstream processing to deliver battery-grade products is the portion of the global lithium- ion battery supply chain which generally sees a huge value uplift.

"As a second-generationlithium-tantalum developer, we believe we have a unique opportunity to explore this scenario at Kathleen Valley, given the scale, grade and quality of our project and its location proximal to infrastructure, key logistics and supply chains in the North-Eastern Goldfields of WA.

"The Integrated Project examined in the Downstream Scoping Study builds on the extremely robust financial outcomes of the recently announced PFS and clearly shows the substantial financial and economic returns that would be generated by developing an integrated project.

"The location of the Kathleen Valley deposit is ideally suited to a long-life Integrated Project with excellent access to downstream inputs plus the significant benefits stemming from lower operating costs compared to a stand-alone spodumene plant.

"Our primary objective is now to press ahead with the planned Definitive Feasibility Study including further engineering and testwork associated with developing an integrated project at Kathleen Valley. We are delighted with the initial results of the Downstream Study and intend to continue to vigorously pursue ongoing engineering, marketing and funding efforts to bring Kathleen Valley Lithium-Tantalum Project into production".

Kathleen Valley Integrated Project - Project Background

The 100%-owned Kathleen Valley Lithium-Tantalum Project is located on four granted Mining Licences and one Mining Licence Application approximately 680km north-east of Perth and 400km north of Kalgoorlie in the Eastern Goldfields of Western Australia (Figure 1). The Project is readily accessible by sealed highways which connect with exporting ports at Geraldton and Fremantle.

Other infrastructure located close to the Project includes a power line, a natural gas pipeline and existing mine camps with sealed airstrips capable of accommodating large passenger aircraft.

Following a substantial increase in the Mineral Resource at Kathleen Valley, the Company released an updated PFS on 9th October 2020. The PFS studied the establishment of a 2Mtpa mining and Whole of Ore Flotation (WOF) processing operation. Key financial outcomes of the PFS included:

• LOM free cash flow after-tax of A$4.8B (averaging ~A$129M per annum during production)
• Project payback of approximately 3 years post-production
• Post-taxNPV8%(real) of A$1.12B and IRR of 37%
• Pre-productionand capital expenditure of A$325M
• LOM Cash costs of US$310 /dmt Li2O concentrate (inclusive of tantalum credits, excluding royalties) (1) (2)
• Ore Reserve of 71 Mt @ 1.40% Li2O and 130ppm Ta2O5

1 Cash operating costs includeall mining, processing, transport, state, freight to port, port costs and site administration and overhead costs. Excludes sustaining capital.

2As royalties are predominantly sales-price dependent they have not been included in cash costs. At PFS Li2O pricing of US$739/t royalties equate to $67/t for the base case presented above.

Refer to the Cautionary Statement on page 1 of this announcement for further information regarding the production targets and forecast financial statements in this announcement.

The DSS examined the integrated downstream refining of SC6.0 product on-site at Kathleen Valley. The refinery has been designed as a series of process trains that can be replicated for additional capacity to facilitate a future expansion to 4Mtpa WOF ore throughput with minimal impact on the operating project.

As outlined in the PFS, following conventional open pit/underground mining and delivery to the Run- of-Mine (ROM) pad, ore will be processed to produce SC6.0 and tantalum concentrates. Tantalum

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concentrate/s will be transported off-site for further upgrade and delivery to downstream customers, while the SC6.0 would be refined on-site to deliver a battery-grade LHM or LSM.

The DSS was completed to an overall +/- 30% costing accuracy using the key parameters and assumptions defined both in the PFS and set-out in Table 2 below and as further outlined in this announcement. By-product credits from the production of tantalum concentrate were considered in the analysis. Figure 2 shows the proposed site layout including mining areas, WOF processing facilities, downstream refinery and non-process infrastructure.

Figure 1: Kathleen Valley Project - Location, infrastructure, existing mines and regional geology

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