Own Liontown shares? Here's when the lithium stock could be profitable

When will this lithium developer report its first profit?

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If you own Liontown Resources Ltd (ASX: LTR) shares, you will probably be aware that it won't be long until the Kathleen Valley Lithium Project commences production.

The lithium developer's most recent update reiterated that "the commencement of first concentrate production [is expected] from mid-calendar year 2024."

Given that we are now in the back end of March, this means that Liontown could be pulling lithium out of the ground in just a few months.

This also means that the days of burning through cash could soon be behind the company. But just how soon could Liontown be profitable? Let's take a look and find out.

When will Liontown be profitable?

Let's now go through what analysts at Goldman Sachs are forecasting year by year, starting with FY 2025.

According to the note, the broker expects Liontown to deliver spodumene production of 260kt in FY 2025. And with Goldman forecasting an average realised price of US$922 a tonne for 6% grade spodumene, it estimates that this will lead to revenue of A$363 million for the year.

Unfortunately, that won't be enough for an underlying EBITDA profit, with Goldman expecting a loss of $18 million for the period.

But it gets better in FY 2026 when Goldman expects production to ramp up to 470kt with an average realised spodumene price of US$887 a tonne.

This is forecast to generate revenue of A$628 million, positive underlying EBITDA of A$177 million, and underlying earnings of A$81 million.

It will be onwards and upwards from here, which could be good news for Liontown shares.

FY 2027 and FY 2028 forecasts

For FY 2027, Goldman estimates production of 512kt and an average realised price of US$1,073 a tonne.

This is expected to lead to revenue of A$798 million, underlying EBITDA of A$282 million, and underlying earnings of A$140 million.

Finally, in FY 2028, production is forecast to come in at 579kt with an average realised spodumene price of US$1,266 a tonne.

Goldman believes this will underpin revenue of A$1,048 million, underlying EBITDA of A$418 million, and underlying earnings of A$232 million.

At this point, the broker believes that Liontown will be in a position to pay its first dividend. Though, only a modest 0.9 cents per share payout is currently forecast by the broker.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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