Liontown Resources Ltd (ASX: LTR) shares were on fire on Tuesday and rocketed higher.
The lithium miner's shares ended the day approximately 12% higher at 70.5 cents.
Why did Liontown shares rocket?
Investors were buying the company's shares following the release of the lithium miner's second quarter update.
For the three months ended 31 December, Liontown reported a 215% quarter on quarter increase in spodumene concentrate production to 88,683 dry metric tonnes (dmt).
This supported a massive 651% increase in spodumene concentrate shipments to 81,341 dmt and an equally impressive 674% jump in total revenue to $89.8 million.
Liontown also revealed that it achieved net cash from operating activities of $16.7 million for the quarter.
Can its shares keep rising?
The team at Bell Potter was impressed with the company's performance and appears to believe it is supportive of its bullish view on the stock.
Commenting on the company's performance during the second quarter, the broker said:
LTR reported December 2024 quarterly spodumene concentrate production of 89kt at 5.2% Li2O (BP est. 62kt) and sales of 81kt, supporting revenues of $90m (BP est $63m) and a closing cash position of $193m (prior quarter $263m). Kathleen Valley's unit operating costs were US$652/t and All-In Sustaining Costs US$763/t (both FOB SC6e).
The ramp-up of production at Kathleen Valley continues go to well from open pit and underground mining through to processing (averaged 88% of planned rates) and concentrate grades and recoveries (now 59%, targeting 70%). LTR's average price received during the quarter was US$806/t SC6e and compares with market indices averaging around US$817/t. Commercial production at Kathleen Valley is expected to be declared in the current quarter.
Big return potential
In response to the update, the broker has reaffirmed its speculative buy rating and $1.40 price target on Liontown's shares. This suggests that its shares could almost double in value over the next 12 months.
The broker concludes:
LTR's 100% owned Kathleen Valley lithium project remains highly strategic in terms of scale, long project life and location in a tier-one mining jurisdiction. LTR has offtake contracts with top-tier EV and battery OEMs. Under our modelled assumptions, we expect that LTR is fully funded to free cash flow. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
All in all, this could make Liontown worth considering if you are looking for exposure to lithium and have a high tolerance for risk.
