Ore Resources (ASX: OR3) identified a fast-track route to early cash flow from its Kangaroo Hills lithium project in Western Australia after a positive scoping study confirmed a direct shipping ore (DSO) opportunity.

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Managing director and chief executive Nick Rathjen said the study results demonstrated the robust technical viability and strong forecast economic outcomes of a capital-lite, rapid-deployment operation at Kangaroo Hills. The proposed development would involve open pit mining, crushing, trucking and export of lithium-bearing pegmatite ore under a DSO arrangement.

He told shareholders the study delivers a compelling assessment of Kangaroo Hills’ development potential and provides a strong platform for rapid execution. Kangaroo Hills is a key component of the broader Coolgardie lithium projects in the Eastern Goldfields, giving the project a clearer pathway from exploration success toward production than a more capital-intensive processing build.

“The study demonstrates that a contractor-led DSO development pathway at Kangaroo Hills offers a low-cost, rapid pathway to substantial free cashflow generation, underpinned by robust technical and operating outcomes,” Mr Rathjen said.

“By leveraging contract mining, crushing and logistics services, the proposed development minimises upfront capital requirements, shortens implementation timelines and delivers attractive project economics.

“Importantly, the speed to market offered by the DSO approach aligns strongly with current lithium market conditions. This operating model generates a strong projected operating margin at modest pricing assumptions and delivers a quick payback, highlighting the potential for rapid cash generation and value creation.”

The study release coincides with Ore Resources declaring an initial mineral resource for Kangaroo Hills of 3.10 million tonnes at 1.01% lithium oxide (Li2O), for 31,200 tonnes of contained Li2O.

Mr Rathjen said the initial mineral resource is a key milestone that reflects more than 38,000 metres of reverse circulation, air core and diamond drilling completed since the discovery of lithium mineralisation in 2022. That drilling base now provides the technical support needed for the company to assess whether a DSO operation can be advanced on the proposed timeline.

In addition to lithium, the mineral resource contains an average grade of 118 parts per million tantalum pentoxide (Ta2O5), which compares strongly with several regional lithium operations that produce tantalum concentrates as a by-product.

“This multi-commodity potential reflects an additional potential revenue stream which we intend to evaluate and unlock,” he said.

“We also remain highly encouraged by the broader exploration potential across our Coolgardie lithium projects.”

Ore Resources is targeting a final investment decision, prompt project commencement and first DSO production by mid-2027.

OR3 was steady at 9.0 cents, with a market capitalisation of $74.47 million before the market opened.

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