What clawed down the Liontown share price by 15% in November?

The safety net of Albermarle's bid is no longer there to catch the Liontown share price.

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Sad looking man wearing a lion mascot, symbolising a falling Liontown share price.

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The Liontown Resources Ltd (ASX: LTR) share price received a scathing reception last month.

Shares in the lithium hopeful fell 14.6% in November despite the S&P/ASX 200 Materials Index (ASX: XMJ) gaining nearly 5%. The disappointing performance adds to a diabolical showing in October, which saw Liontown shares plummet 45% after Albemarle Corporation (NYSE: ALB) canned its takeover plans.

But that was October… leading us to the question of what tainted Liontown's waters last month.

Nasty November

It was always going to be a challenging month for the Kathleen Valley project developer after losing the backing of a $6.6 billion bid. The collapsed deal left Liontown in the lurch, necessitating an abrupt capital raising to shore up its development funding.

Obtaining nearly $380 million in capital by increasing the number of outstanding shares by approximately 10% arguably didn't do the Liontown share price any favours. Not to mention the dramatic 40% discount to Albemarle's bid said shares were offered.

Source: Trading Economics, Lithium Carbonate price

Adding insult to injury, lithium prices continued to cascade last month. Already valued at a fraction of 2022 levels, the electrifying material tumbled an additional 30% in November. And unfortunately, some experts suspect it will get worse from here.

Data by Trading View

While one might expect changes in the lithium price to impact all ASX lithium shares equally, last month's performances say otherwise. As shown above, the Liontown share price suffered the most among the league of multi-billion-dollar lithium miners.

One contributing factor could be Liontown's pre-revenue/pre-production phase. The company's valuation relies on future cash flows, with minimal intrinsic value tied to existing operations. Whereas Mineral Resources Ltd (ASX: MIN), Pilbara Minerals Ltd (ASX: PLS), and Allkem Ltd (ASX: AKE) all already hold established assets.

Looking on the bright side of the Liontown share price

It wasn't all doom and gloom at Liontown HQ, though. During the company's annual general meeting, chair Tim Goyder highlighted an important detail, stating:

During financial year 2023, the price of spodumene concentrate averaged a very healthy US$6,482 per tonne. It finished the period at a 12-month low of US$3,750 US a tonne. Since then, it has fallen further to around US$1,590 a tonne1.

With an expected ten-year average C1 cash cost at Kathleen Valley of AU$651 per tonne, or roughly US$475 per tonne2, it still provides a healthy margin.

However, shareholders won't truly know the cost to mine until Kathleen is up and running.

The Liontown Resources share price is down 9% today, fetching $1.24 a pop.

Motley Fool contributor Mitchell Lawler has positions in Albemarle. 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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