Liontown share price charges higher on 'tremendous' quarter

This lithium developer's shares are having a strong start to the week. But why?

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The Liontown Resources Ltd (ASX: LTR) share price is catching the eye on Monday morning.

At the time of writing, the lithium developer's shares are up 3.5% to $1.16.

Why is the Liontown share price rising today?

As well as benefiting from a relatively positive session for lithium stocks, investors appear to have responded positively to the company's quarterly update.

As a reminder, Liontown is still a developer and not a miner. So, it isn't at that point in its development to be generating revenue yet.

Instead, its main focus is the development of the Kathleen Valley Lithium Project in Western Australia.

What did the company announce?

The good news is that the company's development of the Kathleen Valley Lithium Project is coming along nicely.

And, importantly, it remains on schedule for first production by mid-2024 and is still on budget. The latter is a big positive in the current inflationary environment. Management commented:

[T]he Kathleen Valley Lithium Project (the Project) was more than 85 percent complete, on an earned value basis, by the end of March 2024. Significantly, the process plant was approximately 90% complete by the end of the period (also on an earned value basis), with another major milestone reached with commissioning commenced at the dry plant in late March 2024. The Project remains on budget and schedule for first production mid-2024.

In light of this, business readiness preparations and plan execution activities continued to build momentum during the quarter. Management notes that this is a core activity to ensure a sustained and successful ramp-up to production.

Recruitment for operations start-up continued to plan with 258 full-time employees directly employed by Liontown Resources at the end of the quarter.

The quarter was of course a busy one in the finance department, with Liontown securing a $550 million debt package with a syndicate of leading international and domestic commercial banks and government credit agencies in March.

Liontown notes that this facility provides financial certainty and sufficient time to complete its review of Kathleen Valley's 4Mtpa expansion. An update on the potential deferral of this expansion will be announced during the current quarter.

'Tremendous progress'

Liontown's Managing Director, Tony Ottaviano, was pleased with the quarter. He said:

The March Quarter saw tremendous progress across all major work fronts at Kathleen Valley, with construction of the process plant, the critical path to first production, being 90 percent complete on an earned value basis. We remain confident in our ability to deliver our Tier-1 lithium project on budget and schedule to first production by mid-2024.

The execution of the A$550 million debt package was significant, providing access to capital to see Kathleen Valley into first production, ramp-up to 3Mtpa and positive cashflow. Securing capital from a leading international and domestic syndicate, as well as government agencies, further reinforces the strength of the underlying technical and financial qualities of Kathleen Valley and provides a very strong endorsement of our Project.

Ottaviano also touched on its expansion review. He said:

As announced during the quarter, we are currently reviewing and examining the options for deferring the 4Mtpa mine expansion until market conditions improve. The review is progressing well and we are aiming to release the results to the market by the end of the upcoming quarter.

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 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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