Liontown Resources Ltd (ASX: LTR) shares are starting the week in the red.
At the time of writing, the lithium miner's shares are down 1% to 82.5 cents.
Why are Liontown shares falling?
Investors have been selling the company's shares this morning after broad weakness in the lithium industry offset the release of an update on its expectations for the Kathleen Valley Lithium Project in FY 2025 and beyond.
According to the release, following a strong commencement of production ramp-up, Liontown is resetting its baseline for its mine and production plans. This will see it prioritise higher margin ore at reduced costs to adapt to the low-price lithium environment.
The company notes that its revised mine plan is designed to deliver 2.8Mtpa production rate from the end of FY 2027. This will be with a focus on high margin tonnes and is expected to result in a reduction in development and fixed costs.
It is expecting unit operating costs (FOB) of A$775 to A$855 per dmt spodumene concentrate 6% (SC6) sold for the second half of FY 2025. This compares favourably to the current spot price of US$760 (A$1,150) per tonne.
Another positive is that up to A$100 million in cost reductions and deferrals are expected to be captured through a Business Optimisation Program. Management believes this demonstrates its disciplined capital and cost management.
It also highlights that it has the optionality for future expansion preserved when market conditions improve.
'Companies need to quickly adapt'
Liontown's managing director and CEO, Tony Ottaviano, spoke about the company's need to adapt to the low-price lithium environment. He said:
When market conditions change, companies need to quickly adapt to meet the market.
Through the business optimisation work done by our team, the revised mine plan and guidance demonstrates our responsiveness to the low-price environment.
Ottaviano appears confident that the decisions the company is making today will ensure that long-term value is created for shareholders. The CEO added:
Our decision to mine underground affords Liontown the flexibility to target high margin areas of our tier 1 resource and scale our operations to meet the market, including preserving the ability to pursue expansion when the market recovers.
Our goal is to ensure long-term value for our shareholders by leveraging the quality of our assets to meet strong long-term demand for lithium.
Following today's movement, Liontown shares are now down 43% since this time last year.
