The Liontown Resources Limited (ASX: LTR) share price has started the month in a very disappointing fashion.
After just three trading days, the lithium developer’s shares are down 10.5%.
Though, that’s a decent outcome given the Liontown share price was down as much as 19% on 1 June.
What’s next for the Liontown share price?
The Liontown share price could be given a boost and put this recent blip behind it on Monday.
That’s because on Monday the company is scheduled to announce a definitive full form binding offtake agreement with electric car giant Tesla.
Last week Liontown advised that the two parties had mutually agreed to extend the termination date for the binding lithium offtake term sheet until 6 June. This was to allow Liontown and Tesla to complete negotiations for the agreement.
If everything goes to plan, Tesla will be signing up for up to 150,000 dry metric tonnes per annum of spodumene concentrate from Liontown’s Kathleen Valley project from 2024. This represents approximately one-third of the project’s start-up production capacity of ~500,000 tonnes per annum.
This will complement the definitive full-form offtake agreement the company has signed with LG Energy Solution. That agreement is for the supply of 100,000 dry metric tonnes in the first year, increasing to 150,000 tonnes per year in subsequent years.
But it is unlikely to stop there. The company recently confirmed that it continues to progress negotiations with other potential tier-one global customers that would complement its offtake strategy.
Are its shares in the buy zone?
One broker that appears to see a lot of value in the Liontown share price is Macquarie.
Last week the broker retained its outperform rating and $2.50 price target on the company’s shares. This is almost double the current Liontown share price.