Battery minerals company Liontown Resources has issued a letter of award for an underground mining services contract worth A$1bn ($640m) at the Kathleen Valley lithium project in Western Australia to Byrnecut Australia.

Under the terms of the contract, Byrnecut Australia will cover all aspects of underground construction at the Australian lithium project for a period of four years.

It includes significant early capitalised development and production across the Mt Mann and Northwest Flats orebodies to support the initial plant throughput capacity of three metric tonnes per annum (mtpa).

The total contract value includes operating costs, sustaining capital, and early enabling works for the planned 4mtpa expansion as part of the underground mine’s longer-term operation.

The contract mining company plans to invest over A$125m ($80m) in new equipment to deliver the underground mining services.

Byrnecut Australia aims to commence mobilising to the site throughout the September quarter in line with the on-schedule conclusion of open pit mining activities at Mt Mann.

According to Liontown Resources, Mt Mann will serve as the central location for the future portals into the underground operations, with development scheduled to begin in the December quarter. There will be six portals in total.

Liontown managing director and CEO Tony Ottaviano said: “At around A$1 billion this is the largest contract to be awarded by Liontown and is reflective of operational requirements, external factors and the four-year duration.

“We remain on track for first production from Kathleen Valley by mid-2024 and I look forward to partnering with Byrnecut for the next stage of our project development.”

Byrnecut Australia’s award of the underground mining services at the Kathleen Valley project is subject to the finalisation of a binding full-form contract.

Last month, Liontown Resources awarded a spodumene and DSO haulage contract at the Kathleen Valley lithium project to integrated logistics solutions provider Qube.