Liontown’s Underground Ramp-Up Drives 91% Revenue Surge in Q2 FY26

Transition to Underground Mining

Liontown Limited marked a significant milestone in its FY26 December quarter results by completing the open pit mining phase at Kathleen Valley on schedule and fully transitioning to underground operations. This strategic shift has already yielded tangible benefits, with underground ore production rising 37% quarter-on-quarter to 308,000 dry metric tonnes at an average grade of approximately 1.4% lithium oxide. The ramp-up aligns with the company’s plan to reach a 1.5 million tonnes per annum run-rate by the end of March 2026, setting the stage for further growth.

Operational Performance and Recovery Improvements

Operational metrics reveal steady progress, with plant availability maintained at 92% and lithium recovery improving to 63% during the quarter. Liontown is targeting a 70% recovery rate as underground ore becomes the dominant feed source, reflecting confidence in the consistency of the Mt Mann orebody and the effectiveness of the paste-fill plant, which is Australia's largest and designed for 4 Mtpa capacity. The company’s deliberate feed sequencing and circuit optimisation underpin these gains, even as the transition period includes processing residual open pit ore.

Financial Strength and Cost Discipline

Financially, Liontown delivered a robust quarter with revenue climbing 91% to A$130 million, driven by higher shipping volumes and improved realised prices, which averaged A$1,365 per tonne (US$900/t). Despite a lag behind spot spodumene prices due to contract timing, the company expects further price improvements in coming quarters. Unit operating costs decreased by 17% to A$910 per dry metric tonne sold, reflecting lower open pit mining costs in the final ore zone, better recoveries, and economies of scale from the ramp-up. All-in sustaining costs fell 22% to A$1,059 per tonne. Importantly, Liontown achieved operating cash flow neutrality during this transition phase and maintained a strong cash balance of A$390 million, providing flexibility for growth and capital discipline.

Guidance and Market Outlook

The company reiterated FY26 guidance as a transition year, with underground mining ramping up and open pit operations completed. By the end of Q3 FY26, Liontown expects to reach a 1.5 Mtpa underground run-rate and maintain a 70% lithium recovery target. Unit costs are forecast to trend lower from FY27 as underground volumes increase and capital intensity moderates. The broader lithium market outlook remains positive, supported by record electric vehicle sales, surging battery demand, and a persistent market deficit that underpins pricing strength. Liontown’s diversified offtake contracts and strategic positioning suggest it is well placed to capitalise on these trends.

Growth and Expansion Prospects

Looking ahead, Liontown is evaluating growth options including a potential expansion of Kathleen Valley’s capacity beyond the current 2.8 Mtpa underground mine plan. A study is underway to refresh the 4 Mtpa expansion case, focusing on plant debottlenecking and accessing additional ore tonnes. This brownfield expansion could reduce unit costs further and accelerate time to market, leveraging existing infrastructure and approvals. The company balances growth ambitions with disciplined capital allocation, debt management, and shareholder returns, positioning itself for sustainable long-term value creation.