Ramp-Up Risks Loom as Liontown Defers Capital and Targets Higher Recovery Rates

Strong Operational Momentum at Kathleen Valley

Liontown Resources has reported a compelling performance for the December quarter of fiscal year 2025, marking a significant milestone in the ramp-up of its Kathleen Valley lithium project. The company achieved a positive net cash flow from operating activities of A$16.7 million, a remarkable feat given that this is only the second quarter following first production in July 2024. This financial strength is underpinned by record mining and processing outputs, signaling that Kathleen Valley is rapidly transitioning from development to a steady-state operation.

Mining operations delivered a record quarter with 1.17 million tonnes of ore mined, including both open pit and underground sources. Notably, underground development progressed with 1,902 metres completed during the quarter, supporting the planned transition to underground mining in FY26. The focus on the main ore bench and ROM stockpiles has resulted in over 1.3 million tonnes of stockpiled ore by quarter end, providing a solid buffer for ongoing production.

Processing Efficiency and Product Quality

The processing plant exceeded expectations, processing 619,000 dry metric tonnes of ore at an annualised run-rate of approximately 2.4 million tonnes. The average SAG mill availability was a robust 89% for the quarter, peaking at 92% in December. Lithia recovery improved significantly, rising from 45% in the first quarter to 55% in the December quarter, with a December monthly average of 59%. The company is targeting a lithia recovery rate of around 70% by Q3 FY26, indicating further upside potential in operational efficiency.

Spodumene concentrate production reached 88,683 dry metric tonnes at a weighted average grade of 5.2% Li2O, with shipments totaling 81,341 dry metric tonnes. The company also commenced tantalite concentrate production, diversifying its product portfolio. The average realised price for spodumene concentrate was US$806 per tonne (SC6 equivalent), reflecting strong market demand and pricing conditions.

Financial Strength and Capital Management

Financially, Liontown remains well-positioned with a cash balance of A$192.9 million at the end of December 2024, bolstered by a further A$11.9 million received post-quarter for shipments made in late December. Revenue for the quarter was A$89.8 million, supported by solid sales volumes and favourable pricing. Unit operating costs (FOB) were approximately A$1,000 per SC6e dry metric tonne sold, with all-in sustaining costs (AISC) at A$1,170 per tonne, both expected to normalise as ramp-up progresses.

Capital expenditure payments related to the Kathleen Valley project totaled A$45 million during the quarter, with approximately A$11 million remaining to be paid in the second half of FY25. The company deferred around A$5 million of project capital from the first half to the second half of the fiscal year, maintaining its guidance for H2 FY25.

Sustainability and Strategic Outlook

Liontown continues to prioritise safety and environmental, social, and governance (ESG) performance, reporting a Lost Time Injury Frequency Rate (LTIFR) of 0.66 and achieving 82% renewable power usage during the quarter. The company’s strategy remains focused on establishing Kathleen Valley as a globally significant, sustainable spodumene supplier while pursuing downstream expansion and portfolio growth through organic development and value-accretive acquisitions.

With strong inbound interest from customers and the commencement of commercial production with key offtake partners, Liontown is well-placed to capitalise on the growing lithium market. The company’s operational discipline and financial robustness provide a solid foundation for future value creation as ramp-up continues and underground mining commences.