Liontown Resources Ltd (ASX: LTR) shares are on course to end the week in a positive note.
In morning trade, the lithium developer's shares are up 1.5% to $1.42.
Why are Liontown shares charging higher?
Investors have been buying the company's shares this morning in response to a project update.
According to the release, Liontown has signed an agreement with GR Engineering Services Ltd (ASX: GNG) for the Engineering, Procurement and Construction (EPC) contract at the Kathleen Valley Lithium Project.
This is for the delivery and commissioning of the Paste Plant facility to support the underground mining operations at Kathleen Valley.
The release notes that the Paste Plant will include two trains capable of producing up to 160m3 of paste per hour and has been designed to accommodate future expansion of mining operations to 4Mtpa.
Management highlights that the delivery of cemented paste fill is an integral part of the underground mining cycle at Kathleen Valley. That's because it maximises recovery of the underground orebody and planned production rates, as well as reduces the size of the surface tailings dam that would otherwise be required.
The Paste Plant has also been designed to facilitate dry stacking and water recovery. This further increases the amount of recycled water the site utilises.
What is the cost?
The EPC is valued at approximately $71 million according to the company.
The good news is that this forms part of planned and budgeted next stage of growth capital costs post first production and funding is covered by the recently announced $550 million financing facility.
And with everything else running on time, investors will be pleased to learn that GR Engineering Services has progressed the design, procurement and initial site works under an early works agreement. This is to ensure timely delivery of the Paste Plant.
Commenting on the agreement with GR Engineering Services, Liontown Resources' managing director and CEO, Tony Ottaviano, said:
We are pleased to award the contract for the design and construction of the Paste Plant which will support and further de-risk the planned underground production rates at Kathleen Valley. GRES has designed and constructed multiple paste plant facilities throughout Western Australia and the GRES team has mobilised and commenced initial works at Kathleen Valley.
It isn't just Liontown shares rising today. The GR Engineering Services share price has risen in morning trade on the back of this news. Its shares are now up by 23% since this time last year.
