Why is the Liontown (ASX:LTR) share price sinking 6% today?

The ASX resources company is having a rare day in the red this month…

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

Shares in the mining exploration company plunged more than 6% in today’s session to an intraday low of $1.41. At the time of writing, they have clawed back some ground to be down 3.16% at $1.47 apiece.

Let’s take a look at why the Liontown share price is struggling.

What’s weighing down the Liontown share price?

The Liontown share price has been under pressure today despite the company not releasing any price-sensitive news.

However, there are multiple factors that could be weighing down its shares.

The first consideration is weakness in the broader market. In addition, sliding lithium spot prices could also be having an effect.

Another consideration is the company’s recent performance.

Since the start of September, shares in the mining exploration company have soared more than 57%.

As a result, many investors may be looking to lock in profits given the uncertainty in the broader market.

What’s Liontown been up to?

Shares in Liontown have had a miraculous run this month.

Investors have been bidding shares in the mining explorer higher as anticipation builds for the Initial Public Offering of its spinoff.

Last month, Liontown announced that it will be spinning off its non-lithium assets into Minerals 260 Limited.

In return, current Liontown shareholders will receive 1 share in Minerals 260 for every 11.91 Liontown shares they hold.

As part of the demerger, Minerals 260 will own the Moora Gold-Nickel-Copper-PGE Project.

In addition, the new company will also have an option interest in the Koojan Gold-Nickel-Copper-PGE Project and the Dingo Rocks Project.

Minerals 260 is poised to float on the ASX on 11 October.

In addition, the Liontown share price has also received a boost after the company was added to the ASX 300 Index as part of S&P Dow Jones Indices’ quarterly rebalance.

Snapshot of the Liontown share price

Liontown shares have been the beneficiary of increased mining exploration expenditure and a commodity price boom in 2021.

Liontown is best known for its Kathleen Valley Lithium project in Western Australia.

Since the start of the year, shares in the mining explorer have soared more than 338%. They are up more than 684% over the last 12 months.

Should you invest $1,000 in Liontown right now?

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Motley Fool contributor Nikhil Gangaram 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 Bruce Jackson.

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