Still A Roaring Lion

Liontown Resources (ASX: LTR) showed at the Bell Potter Unearthed investors event that they are still fighting on their feet to navigate the negative cycle in the lithium market and achieve first ore in mid 2024 as promised.

Highlights from their presentation include:

·       Overall project schedule sitting at over 72% completion, on an earned value basis as of 31 December 2023

·       A 95MW hybrid power station will deliver roughly 60% of renewable power and is advancing at schedule

·       Dry plant commissioning to start early Q2 2024 as scheduled

·       Wet plant remaining on track for commissioning later in Q2 2024 with maiden production expected to start not long after

·       Cash balance of $517 million as of December 31 2023

The company also mentioned that due to the cancellation of a major loan facility from an Australian banking syndicate, they are deferring their expansion plans to transition from 3Mtpa to 4Mtpa, producing a revised mine plan sequence, and evaluating additional cost optimisation measures, as well as progressing a smaller finance facility (refer also to LTR ASX announcement on January 22 2023).

Interestingly, in their presentation LTR tries to address the recent wave of negative reports for the lithium market, by which lame pricing predictions keep spooking away investors. The company made reference to the recent trend of supply cuts from miners and the roll on effect of low prices in the market, stating that “125kt of supply is uneconomic at current spot Carbonate price, some 9% of the current supply in the market” and more interestingly citing a SMM report in which the Chinese magazine announces the decline of lepidolite and spodumene supply volumes in the Chinese domestic market with reductions of 18.4% and 22.9% respectively between November and December 2023.

Expectations are high for this company and their Kathleen Valley project, which undoubtedly has strong potential to become a key player in the battery revolution. By delivering their start of production guidance and survive the current depressed market, they will be surely well positioned to reap the benefits when prices turn around as the market matures and finds its balance.