Liontown reports maiden $93 million profit as underground ramp-up accelerates

Financial Turnaround Amid Market Recovery

Liontown Limited (ASX:LTR) has flipped the script in FY26, posting a maiden net profit after tax of $93 million, a stark reversal from the $193 million loss a year earlier. Underlying NPAT, which strips out one-offs, was $14 million, reflecting disciplined delivery during a volatile lithium market. Revenue surged 115% to $639 million, driven by a 35% increase in spodumene concentrate sales volume and a 75% jump in realised prices to US$1,379 per dry metric tonne SC6e CIF.

The company generated strong operating cash flow of $182 million, bolstering cash reserves to $561 million at year-end. This financial strength was underpinned by the conversion of LG Energy Solution’s US$250 million convertible notes into equity in February 2026, which eliminated $487 million of debt and derivative liabilities, moving Liontown to a net cash position and reducing gearing to 20%.

Operational Milestones: Underground Transition and Ramp-Up

FY26 was a pivotal year operationally as Liontown completed open pit mining on schedule in December 2025, fully transitioning Kathleen Valley to an underground operation. The underground mine achieved a 1.5 Mtpa run-rate ahead of schedule in January 2026 and is on track for a 2.8 Mtpa run-rate by the end of FY27, unlocking new ore zones and expanding capacity.

Processing plant performance remained robust with 92% availability and lithia recoveries averaging 61%, improving notably when fed exclusively with clean underground ore. The company produced 392,000 dry metric tonnes of spodumene concentrate at a weighted average grade of 5.1% Li2O and shipped 382,000 tonnes, maintaining strong customer demand and contract fulfilment.

Unit operating costs held within guidance at A$984 per dry metric tonne sold, despite inflationary pressures including higher oil prices linked to geopolitical tensions. Costs are expected to rise temporarily with full underground feed and pre-investment in expansion but should decline as volumes ramp up and fixed costs are spread.

Expansion Plans and Early Works

Capitalising on the lithium market recovery, Liontown has accelerated early works and long-lead procurement for the Kathleen Valley expansion, with a final investment decision (FID) anticipated by the end of Q1 FY27. Early works include procurement of a 5.5 MW ball mill, underground development at North-West Flats, and construction of Stage 1 of the Mine Services Area.

These steps are designed to mitigate schedule and pricing risks and position the company to flexibly scale production beyond 2.8 Mtpa, addressing a tightening global lithium supply-demand balance. The expansion is expected to deliver incremental production increases, preserving capital efficiency and operational flexibility.

Sustainability and Indigenous Partnerships

Liontown continues to embed sustainability into its operations, achieving 80% renewable energy penetration at Kathleen Valley via a hybrid power station and committing to net zero Scope 1 and 2 greenhouse gas emissions by 2034. Water stewardship remains a priority with 1.76 GL abstracted within licensed limits and ongoing efforts to optimise recycling and reduce environmental impact.

The company deepens its partnership with the Tjiwarl Traditional Owners, who contributed 1,740 hours of on-Country monitoring. Liontown spent $24 million with Aboriginal businesses in FY26 and celebrated the first Tjiwarl community member completing an electrical apprenticeship with the company. Safety remains a focus with an independent safety culture review underway to address increased injury rates linked to underground ramp-up.

Governance and Remuneration

The Board has strengthened governance with new appointments including Giselle Collins as Chair of the Audit and Risk Committee. Executive remuneration aligns with performance, with CEO Antonino Ottaviano’s fixed pay increased 44% to $1.3 million to reflect the company’s growth and complexity. Short-term incentives reflected a 90.5% performance scorecard outcome, with 40% deferred into equity, while long-term incentives remain linked to relative total shareholder returns and growth metrics.

Outlook and Market Position

Liontown enters FY27 with strong momentum, a robust balance sheet, and a clear pathway to scale Kathleen Valley to full potential. The company’s Tier-1 asset status, diversified customer base, and disciplined capital management position it well to navigate ongoing lithium market volatility and capitalise on structural supply constraints.

While the lithium price environment remains dynamic, Liontown’s operational progress and early expansion works underpin confidence in delivering steady-state production and incremental growth. The upcoming FID will be a key catalyst, determining the pace and scale of expansion amid a tightening global battery minerals market.

Investors will be watching how the company manages ramp-up risks, cost pressures, and sustainability commitments as it transitions from development to a mature producer with a multi-decade mine life.

Liontown’s strong cash flow and underground ramp-up in Q4 FY26 bolster confidence in meeting the 2.8 Mtpa target, while early works on expansion signal readiness to capture market opportunity. The company’s record revenue surge in FY26 reflects both operational and pricing strength.