Liontown Secures A$266M to Drive Kathleen Valley Underground Transition
Liontown Resources has secured approximately A$266 million through a fully underwritten institutional placement, complemented by a share purchase plan, to accelerate the transition of its Kathleen Valley lithium project to 100% underground mining by Q3 FY26. This capital raising strengthens the company’s balance sheet amid challenging lithium market conditions.
- Fully underwritten A$266 million institutional placement
- Non-underwritten share purchase plan targeting up to A$20 million
- Transition to 100% underground mining at Kathleen Valley by Q3 FY26
- National Reconstruction Fund Corporation invests A$50 million as cornerstone investor
- Pro forma cash balance of approximately A$422 million to support operations and growth
Capital Raising to Support Strategic Transition
Liontown Resources Limited (ASX, LTR) has announced a significant capital raising initiative, comprising a fully underwritten institutional placement expected to raise around A$266 million, alongside a non-underwritten share purchase plan (SPP) targeting up to A$20 million. This move is designed to fortify the company’s balance sheet and provide a liquidity buffer amid a subdued lithium pricing environment.
The proceeds will underpin the critical transition of the Kathleen Valley lithium project in Western Australia from open pit to 100% underground mining by the third quarter of fiscal year 2026 (Q3 FY26). This transition is pivotal for Liontown’s operational strategy, aiming to deliver cleaner, higher-grade ore and achieve a lithia recovery target of 70% by Q3 FY26.
Operational Progress and Cost Optimisation
Operationally, Liontown has produced over 320,000 wet metric tonnes of spodumene concentrate at 5.2% lithium oxide grade in FY25, demonstrating resilience despite market volatility. Underground production stoping has commenced on schedule, with development rates strong and infrastructure such as Australia’s largest paste plant commissioned.
The company is actively embedding cost optimisation measures, having delivered A$71 million in cost savings and A$41 million in deferrals during FY25. These initiatives are expected to continue, supporting a reduction in unit operating costs from FY27 as underground operations scale.
Strategic Investment and Balance Sheet Strength
A notable highlight of the capital raising is the participation of the National Reconstruction Fund Corporation (NRFC) as a cornerstone investor, committing A$50 million. The NRFC’s involvement underscores the strategic importance of Kathleen Valley to Australia’s critical minerals sector and economic security.
Post-raising, Liontown’s pro forma cash balance is approximately A$422 million before transaction costs, positioning the company with a robust liquidity buffer to navigate current market challenges and capitalise on future lithium price recoveries and growth opportunities.
Looking Ahead, Growth and Expansion Optionality
Beyond the immediate transition, Liontown is preparing for scalable, low-cost operations with an optimised mine plan targeting 2.8 million tonnes per annum from underground by FY27, with potential expansion to 4 million tonnes per annum. All necessary approvals are in place to support this growth trajectory.
The company’s partnerships with key customers such as LG Energy Solution, Ford, Tesla, and Sumitomo further enhance its strategic positioning and optionality for value-accretive growth initiatives.
Risks and Market Context
While the capital raising and operational progress are positive, Liontown cautions investors about risks including commodity price volatility, operational ramp-up uncertainties, currency fluctuations, and regulatory factors. The company’s forward-looking statements are subject to these and other risks that could materially affect outcomes.
Investors should monitor execution against FY26 guidance, lithium market dynamics, and the uptake of the share purchase plan to gauge the company’s trajectory.
Bottom Line?
Liontown’s capital raise and operational momentum set the stage for a pivotal underground transition, but execution risks and market volatility remain key watchpoints.
Questions in the middle?
- Will Liontown achieve its 70% lithia recovery target by Q3 FY26 amid the underground ramp-up?
- How will lithium price fluctuations impact Liontown’s financial performance and capital management?
- What is the expected uptake and final amount raised under the non-underwritten share purchase plan?
