Liontown Resources delivered a robust September quarter with a significant ramp-up in underground mining at Kathleen Valley, alongside a fortified cash position and strategic contract amendments.
- 105% increase in underground ore mined, achieving 1Mtpa run-rate
- Open pit mining nearing completion on schedule for December 2025
- A$420 million cash balance and 20,912 dmt concentrate inventory
- Unit operating costs rose due to transitional ore feed strategy
- Amendments to Ford debt facility and offtake agreements enhance liquidity and sales flexibility
Strong Operational Momentum
Liontown Resources (ASX, LTR) reported a solid September 2025 quarter, marked by a substantial increase in underground mining activity at its Kathleen Valley Lithium Operation in Western Australia. Underground ore mined more than doubled compared to the previous quarter, reaching a 1 million tonnes per annum run-rate by September, a significant milestone just six months after first stoping commenced. This ramp-up was supported by the mining of 14 stopes during the quarter, averaging 15,000 tonnes each, and the commissioning of critical infrastructure including Australia’s largest paste-fill plant and a ventilation system designed for the mine’s life.
Meanwhile, open pit mining progressed steadily, with the final major ore zone at Kathleen’s Corner reached in September and completion on track for December 2025. The transition from open pit to underground mining is a key operational pivot, with cleaner underground ore expected to improve processing recoveries and reduce costs.
Processing and Production Highlights
The process plant maintained strong performance, processing 580,000 tonnes of ore at an average lithium oxide grade of 1.3%, achieving 92% plant availability despite planned maintenance shutdowns. Production of spodumene concentrate was 87,172 dry metric tonnes at an average grade of 5.0% Li₂O, consistent with expectations during this transitional phase. Recoveries averaged 59%, reflecting the ongoing processing of Ore Sort Potential (OSP) stockpiles containing up to 40% gabbro, a waste rock contaminant. As underground ore becomes the dominant feed, Liontown targets a 70% recovery rate by March 2026.
Tantalite concentrate production also increased by 8% quarter-on-quarter, contributing additional revenue streams. The Kathleen Valley Hybrid Power Station continued to deliver reliable power with a strong renewable component, maintaining 79% renewable energy for the quarter.
Financial Position and Market Strategy
Financially, Liontown closed the quarter with a robust cash balance of A$420 million and 20,912 dry metric tonnes of saleable concentrate inventory. Revenue for the quarter was A$68 million from spodumene concentrate sales, with volumes impacted by seasonal shipping delays and backward-looking pricing formulas referencing lower market prices earlier in the year. Unit operating costs increased 22% to A$1,093 per dry metric tonne sold, primarily due to the higher costs associated with processing OSP stockpiles, but are expected to decline as underground production scales and efficiencies improve.
Strategic amendments to the Ford Motor Company debt facility and offtake agreements, completed after the quarter, have deferred principal and interest repayments by 12 months and reduced committed offtake volumes in 2027 and 2028. These changes enhance near-term liquidity and provide Liontown with greater flexibility to capitalise on spot market opportunities or pursue new partnerships.
Sustainability and Safety Progress
Liontown continues to prioritise safety and sustainability as operations mature. Although the Total Recordable Injury Frequency Rate (TRIFR) and Lost Time Injury Frequency Rate (LTIFR) saw slight increases, all reported injuries were minor. The company has strengthened its health and safety framework through partnerships, including a three-year collaboration with the Royal Flying Doctor Service and piloting a psychosocial wellbeing platform at Kathleen Valley.
On the environmental front, Liontown integrated its Sustainability Report into the FY25 Annual Report and published its first Environmental, Social and Governance Data Book. The company also completed its inaugural Life Cycle Assessment, quantifying the climate impact of spodumene concentrate production to guide future decarbonisation efforts.
Looking Ahead
With the open pit nearing completion and underground operations scaling, Liontown is poised to enter a new phase of steady-state production. The company remains confident in the long-term fundamentals of the lithium market, driven by electric vehicle and energy storage demand, despite subdued pricing in the near term. Operational execution, cost discipline, and business optimisation initiatives will be critical to unlocking full value from Kathleen Valley in FY26 and beyond.
Bottom Line?
Liontown’s disciplined ramp-up and strengthened balance sheet set the stage for improved recoveries and cost efficiencies as underground production dominates.
Questions in the middle?
- How quickly will lithia recoveries improve as underground ore becomes the primary mill feed?
- What impact will the amended Ford agreements have on Liontown’s sales volumes and pricing strategy?
- How will ongoing business optimisation initiatives translate into cost reductions and margin improvements?