Liontown Resources beats expectations amid lithium rout

Elouise FowlerReporter

Jan 21, 2025 – 7.18pm

Save

Share

Gift this article

Listen to this article

4 min

Liontown Resources earned around $US20 for every tonne of lithium mined at its West Australian project in the December quarter, defying a sharp slump in global lithium prices by staying in the black.

WA’s hard rock lithium producers have struggled through a bear market for the battery mineral, driven by weaker-than-expected sales of electric vehicles in 2024 and strong supply from new mines.

Liontown’s Kathleen Valley project, north-east of Perth, started producing lithium-rich spodumene concentrate in July, and to survive the downturn it slashed production and its expansion plans in November. The price rout forced the closure of other mines high up on the cost curve, including Arcadium Lithium’s Mt Cattlin and Core Lithium’s Finniss project.

Liontown’s Kathleen Valley mine. AFR

Spodumene concentrate, containing 6 per cent lithium, has fallen from more than $US8000 ($12,242) a tonne to less than $US800 over the past two years, according to data from S&P Global.

Liontown, backed by iron ore billionaire Gina Rinehart, sold its ore for an average price of $US806 a tonne in the three months to December 31, down from $US846 a tonne in the prior quarter it said on Tuesday.

RELATED QUOTES

LTRLiontown Resources

$0.705 11.90%

1 year1 day

Jan 24Apr 24Jul 24Jan 250.5000.7501.0001.2501.500

Updated: Jan 22, 2025 – 12.26am. Data is 20 mins delayed.

View LTR related articles

This dip meant Liontown operated on around a $US20 a tonne margin between the price fetched and the cost of producing the commodity over the last quarter, which was Liontown’s first full quarter in production.

The miner reported a cost of digging – which includes charges like state royalties, and federal taxes – was $US763 a tonne over the same period.

Management later revealed the cost was higher when freight was added to the mix. This was reported after Glyn Lawcock, leading mining analyst at investment bank Barrenjoey, queried the figure on the company’s earnings call.

In response, Grant Donald, Liontown’s chief commercial officer, disclosed the miner’s freight costs were between $US19 to $US30 a tonne, depending on the size of the vessel.

“So you really should be comparing [the cost of production] of $US782 to $US793 per tonne with the $US806 price,” said Mr Lawcock on the Tuesday teleconference. “Yeah, that’s fair,” Mr Donald said.

Liontown reported $16.7 million of operating net cash flow in the quarter, the first positive period when turnover exceeded outgoings. This, plus stronger than expected production and shipping data, pushed the miner’s shares 11 per cent higher to 70¢.

“[It’s] tracking well to deliver on its guidance this financial year,” Mr Lawcock told investors in a note.

Liontown’s spodumene concentrate containing 5.2 per cent lithium – which is slightly below benchmark grade – totalled 88.7 kilodry metric tonnes (kdmt). That was 14 per cent higher than expectations set by Barrenjoey, and 30 per cent higher than consensus. Mr Lawcock said this was due to the ramp up of Kathleen Valley proceeding faster than projected.

Shipments of 81.3 kdmt were also 30 per cent higher than analysts predicted.

While the stock surged on Tuesday, it is well below the $3 a share that Mrs Rinehart paid for a 19 per cent stake in the company between September and October in 2023. Its market capitalisation of $1.66 billion is also a far cry from the $6.6 billion valuation that Albemarle put on Liontown when it bid for the company last year before walking away.

The price of spodumene concentrate fetched $US865 per tonne, according to S&P Global, on Monday.