The Liontown Resources Ltd (ASX: LTR) share price is almost unchanged compared to 34 months ago.
At 97 cents apiece, shares in the lithium hopeful are roughly the same value as they were back in September 2021, despite surpassing $3 a pop in the time between. However, the lack of share price appreciation has failed to deter one company insider from loading up on Liontown shares.
Insider transactions provide a glimpse into the sentiment among people who perhaps most intimately know the company and its intrinsic value. While it's by no means conclusive on whether the shares are 'cheap' or 'expensive', it certainly can be seen as a vote of confidence.
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Hitting buy on Liontown shares
Someone on the board of Liontown Resources made an on-market buy of 55,000 shares yesterday. Because this information must be disclosed to shareholders, we can find all the transaction details.
According to the notice, independent non-executive director Jennifer Morris made the trade on Tuesday. The parcel of Liontown shares was acquired at an average price of 97 cents per share, amounting to a $53,350 investment.
Following the purchase, Morris' indirect and direct ownership of Liontown totals 141,619 shares. The board member also holds 500,000 unlisted options with an exercise price of $2.45, expiring on 23 November 2024.
Morris' $53,350 buy arrived the day after Liontown announced an offtake agreement with Beijing Sinomine International Trade (BSIT) on Tuesday. The announcement helped lift the Liontown Resources share price back above $1.00 for the first time since 19 June.
As part of the agreement, Liontown will supply up to 100,000 dry metric tonnes of spodumene concentrate over a 10-month timeframe beginning 30 September 2024 at the latest. The agreement expands upon existing offtake arrangements with LG, Ford, and Tesla.
Is it a well-timed investment?
The price of lithium is down roughly 85% from its 2022 high, taking a hit as demand for electric vehicles dried up amid heightened financing costs.
However, the Tesla Inc (NASDAQ: TSLA) stock price and the broader share market have rallied over the past month as rate cuts begin re-entering the conversation. Investors are growing more optimistic about lower interest rates being within reach, reigniting hopes of greater lithium demand ahead.
As reported by CNBC, forecasts made by BMI of Fitch Solutions suggest there's a risk of a global lithium shortage next year. Notably, the report highlights an expected 20.4% average annual increase in lithium demand within China between 2023 and 2032 versus a 6% supply growth rate in the country over the same period.
Still, not all analysts are bullish on the battery commodity. As noted by my colleague, James Mickleboro, Goldman Sachs sees little in the way of lithium price upside between now and 2027.
Only time will show whether Jennifer Morris' $53,350 investment in Liontown shares pays off.
