Why is the Liontown share price sinking 6% today?

This lithium miner is failing to roar on Wednesday. Let's find out why.

| More on:
Lion holding and screaming into a yellow loudspeaker on a blue background, symbolising an announcement from Liontown.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Liontown Resources Ltd (ASX: LTR) share price is in the red on Wednesday.

In early trade, the lithium miner's shares are down over 6% to 83 cents.

This has been driven by the release of the company's first quarterly update since commencing production at the Kathleen Valley Lithium Project.

Liontown share price sinks on update

Firstly, it is worth noting that Liontown's production at Kathleen Valley started in late July.

As a result, this update is not a true reflection of future quarters. Particularly given that operations continue to ramp up.

With that in mind, let's dig deeper into what Liontown achieved during the three months.

According to the release, its production progressed to plan and volumes totalled over 28,000 dry metric tonnes (dmt) of spodumene concentrate in the eight weeks since commencement of first production with an average concentrate grade of 5.2% Li2O.

From this, a maiden shipment comprising 10,831 dmt of spodumene concentrate with grading of 5.33% Li2O departed the Port of Geraldton on 27 September bound for an existing offtake customer. Revenue from this shipment was received following the end of the quarter.

Management also revealed that a spot sales strategy for uncontracted spodumene concentrate has been initiated. It achieved a reference price of US$802 per dmt SC6 for a shipment in the current quarter. This represents a premium to the spot price at the time of execution.

Liontown ended the period with a cash balance of $263.1 million.

'Outstanding progress'

The market may not be happy with the update but Liontown's managing director and CEO, Tony Ottaviano, certainly was. He said:

Outstanding progress was made at Kathleen Valley during the September 2024 quarter. The ramp-up of operations is proceeding on schedule, with certain areas surpassing initial expectations. Major milestones achieved this quarter included our first sale of spodumene concentrate, cementing Liontown's status as the world's newest major lithium producer. Subsequent to quarter's end, we also received payment for the first product shipment, which brought a tremendous sense of satisfaction to the Liontown team.

Our quarterly results reflect strong performance in areas within our control, even as we adapt to the challenges presented by the low-price lithium environment. These results demonstrate the effectiveness of Liontown's thorough test work, engineering, process flow design, and management of Tier 1 contractors and equipment.

Following today's weakness, the Liontown share price is now down approximately 50% over the past 12 months.

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.

More on Materials Shares

Close up of a sad young woman reading about declining share price on her phone.
Materials Shares

Pilbara Minerals shares higher despite guidance downgrade and project suspension

This lithium miner has announced a lot of things today. Let's dig deeper into them.

Read more »

Miner looking at a tablet.
Resources Shares

Mineral Resources share price up 7% as company responds to ASX queries

The mining giant has responded to an ASX Aware Letter it received on Friday.

Read more »

Miner looking at a tablet.
Materials Shares

This ASX 300 mining stock is up 27% in a month. Here's why it's in the red today

This mineral explorer has just released its quarterly activities and cash flow report.

Read more »

View of a mine site.
Materials Shares

Guess which ASX lithium stock just rocketed 14% on record quarterly production

This ASX lithium miner has released its third-quarter results.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Materials Shares

5 reasons to buy Rio Tinto shares now

Goldman Sachs has named the reasons why it thinks this mining giant is a buy.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Materials Shares

Guess which ASX 200 stock is tumbling 8% after downgrading its guidance

What's behind this downgrade? Let's dig deeper into things.

Read more »

Businessman taking off in rocket-fuelled office chair
Share Gainers

This ASX lithium stock just rocketed 63%! Here's why

Investors are sending this ASX lithium stock through the roof on Monday. But why?

Read more »

Miner standing in front of a vehicle at a mine site.
Materials Shares

ASX lithium share slides following 39% quarterly revenue plunge

Market conditions continue to pressure the ASX lithium miner.

Read more »