Liontown Limited has successfully transitioned to fully underground lithium mining at Kathleen Valley, boosting production and revenue while cutting costs. The company also secured a significant new offtake agreement and validated strong market demand through its inaugural spodumene auction.
- Transition to 100% underground mining completed
- 21% increase in concentrate production quarter-on-quarter
- Unit operating costs down 17%, AISC down 22%
- New binding offtake agreement with Canmax for 150,000 wmt per annum
- Inaugural spodumene auction closes at US$1,254/dmt, confirming strong demand
Operational Milestone Achieved
Liontown Limited (ASX – LTR) has marked a significant turning point in its Kathleen Valley Lithium Operation, completing the transition from open pit to fully underground mining during the December 2025 quarter. This shift has not only met production targets but also delivered a 21% increase in spodumene concentrate output to 105,342 dry metric tonnes (dmt), reinforcing the operation’s growing momentum.
The completion of mining at the Kathleen’s Corner open pit has allowed the company to focus its efforts entirely on underground development, which saw a 37% increase in ore mined quarter-on-quarter. This operational pivot is central to Liontown’s strategy to ramp underground production to 1.5 million tonnes per annum (Mtpa) by the end of Q3 FY26 and ultimately reach a steady-state of 2.8 Mtpa by FY27.
Cost Efficiency and Financial Strength
Alongside production gains, Liontown reported a 17% reduction in unit operating costs to A$910 per dmt (FOB) and a 22% improvement in all-in sustaining costs (AISC) to A$1,059 per dmt. These cost efficiencies contributed to operating cashflow neutrality during the quarter, a marked improvement from prior periods.
The company ended the quarter with a robust cash position of A$390 million and 13,800 dmt of saleable concentrate inventory, providing a strong liquidity buffer to support ongoing ramp-up activities and strategic initiatives.
Market Position and Sales Strategy
Market conditions for lithium remain favourable, with Liontown’s realised spodumene price for the quarter at US$900 per dmt SC6 equivalent, reflecting contractual pricing set before a late-quarter price rally. Notably, Liontown’s inaugural spot market auction in November closed at a significantly higher US$1,254 per dmt, validating the auction mechanism as an effective price discovery tool and demonstrating strong buyer demand.
Further strengthening its market position, Liontown executed a binding offtake agreement with Canmax Technologies Co., Ltd. for 150,000 wet metric tonnes per annum in calendar years 2027 and 2028. This deal diversifies the customer base and aligns pricing with spodumene concentrate indices, enhancing exposure to market-driven pricing.
Sustainability and Safety Focus
On the sustainability front, Liontown continues to prioritise safety and environmental stewardship. While the Total Recordable Injury Frequency Rate (TRIFR) saw a slight increase due to ramped-up underground activity, proactive measures are in place to strengthen contractor oversight and injury prevention. The Kathleen Valley Hybrid Power Station delivered approximately 85% renewable power during the quarter, underscoring the operation’s low-carbon credentials.
Looking Ahead – Expansion and Optimisation
Looking forward, Liontown has commenced a refresh of its 4 Mtpa expansion study, aiming to identify low-capital, high-return pathways to scale production further. Early assessments include leveraging existing infrastructure and exploring alternative mine access options to accelerate growth once market conditions remain favourable.
With underground production scaling, costs trending downward, and pricing strength expected to flow through, Liontown is well positioned to deliver a strong financial performance in the second half of FY26 and beyond.
Bottom Line?
As Liontown solidifies its underground operations and market foothold, investors will watch closely for the next phase of production growth and cost improvements.
Questions in the middle?
- How will the ongoing ramp-up to 2.8 Mtpa impact unit costs and cashflow in FY27?
- What are the implications of the convertible note conversion on share dilution and valuation?
- How will Liontown’s refreshed expansion study shape its growth trajectory amid volatile lithium prices?