Liontown share price slips as plunging lithium price outweighs pending maiden production

The Liontown Resources Ltd (ASX: LTR) share price is in the red today.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock closed yesterday trading for $1.03. In morning trade on Wednesday, shares are swapping hands for $1.00, down 2.5%.

For some context the ASX 200 is down 0.29% at this same time.

This follows the release of the lithium miner’s quarterly update for the three months ending 31 December.

Here are the highlights.

ASX 200 lithium stock slips amid ongoing lithium price headaches

The Liontown share price is sliding despite the company highlighting that its Kathleen Valley Lithium Project remains on budget and on schedule for first production in mid-2024.

The project, located in Western Australia, is now more than 72% complete. Underground mine development kicked off in November.

Open pit mining was also reported to have progressed in line with plans. Liontown mined 1.4 million bulk cubic metres during the quarter.

In preparation for the startup, the ASX 200 miner said it had  222 full-time employees at the end of 2023, with recruitment ongoing.

The quarter just past also saw Liontown execute a long-term Port Access and Services Agreement with Mid West Ports Authority. This will facilitate the export of lithium spodumene concentrate from the Port of Geraldton.

And on 20 October, Liontown completed a $365 million institutional placement. This was supplemented by a $10.8 million placement to chairman Tim Goyder and a $13.8 million Shareholder Purchase Plan.

What did management say?

Commenting on the quarterly results that have so far failed to boost the Liontown share price today, managing director Tony Ottaviano said:

Of the many milestones reached this quarter, the commencement of underground mining was significant and on schedule.

The team has done an outstanding job in seamlessly mobilising to site, commencing six access portals, and achieving 352 total development metres in less than two months. Byrnecut will progressively mobilise further resources to site as we ramp up operations.

Ottaviano added, “I remain confident in our ability to deliver Kathleen Valley, our Tier-1 lithium project, on budget and schedule to first production by mid-2024.”

Addressing the capital-preserving decision to delay the project expansion — which was announced on 22 January and saw the Liontown share price close the day down a precipitous 21% — Ottaviano said:

Post the end of the quarter, we announced that we have commenced a review to examine the options of deferring the mine expansion from 3Mtpa to 4Mtpa until market conditions improve.

The decision to undertake a review of the planned expansion and associated ramp-up of Kathleen Valley was based on short- to medium-term lithium price forecasts, which have materially declined in recent months, including an almost 60% drop since October 2023.

As at 31 December, the company had a cash balance of $517 million.

Liontown share price snapshot

There have been some big ups and downs for the Liontown share price over the past 12 months. The ASX 200 lithium stock surged in March following a takeover offer from Albemarle Corp (NYSE: ALB), which eventually did not go through.

But the miner hasn’t escaped the impacts of the crashing lithium price, which sees the Liontown share price down 40% since this time last year.

The post Liontown share price slips as plunging lithium price outweighs pending maiden production appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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