Liontown Resources Ltd (ASX: LTR) shares are on the slide on Tuesday.
In morning trade, the lithium miner's shares are down 6% to 81 cents.
This follows the release of the company's quarterly update before the market open.
Image source: Getty Images
Liontown shares sink on quarterly update
During the quarter, Liontown reported production of 85,892 dmt of spodumene concentrate at an average grade of 5.2%.
The company achieved sales of 97,330 dmt across six parcels with an average realised price of US$740 per tonne SC6, down 9% quarter on quarter. This underpinned revenue of $96 million.
One disappointment was that Liontown's all in sustaining cost (AISC) increased 32% from the third quarter to A$1,227 per tonne (or US$786 per tonne). This is now higher than the price it receives for its lithium.
Nevertheless, this didn't stop the company from delivering record net positive operating cash flows of $23 million for the three months. Management notes that this was its third consecutive quarter of positive operating cash flows and was achieved despite the low-price environment.
It achieved this positive cash flow by processing stockpiles. Liontown's CEO, Tony Ottaviano, explains:
With lithium prices falling 24% (~US$203/t) during the quarter, our strategy to process stockpiles enabled us to preserve cash and maintain a strong cash balance at year end. This has been enabled by the leading design and the performance of our fourth-generation process plant and the team's focus on preserving cash.
At the end of the quarter, the company had a cash balance of $156 million.
How does this compare to expectations?
Liontown issued second half guidance late last year and has failed to achieve almost all its targets.
Second half production was 155k dmt versus guidance of 170k dmt to 185k dmt. Concentrate sales were also forecast at 170k smt to 185k dmt but came in at 165k dmt.
Finally, its unit operating costs were A$931 per tonne compared to guidance of A$775 to A$855 per tonne.
It did however achieve its AISC guidance (marginally) and its capex guidance.
Outlook
Ottaviano highlights that FY 2026 will be a transition year for Liontown and believes that it will come out of this low-price environment as a stronger company. He said:
FY26 will be a transition year. Our focus is clear, we need to complete the underground transition, manage costs and cash tightly, and prepare the plant to fully leverage high-grade, low-contamination underground ore in the second half. We're confident that by executing our plan in FY26, the Company will emerge stronger from this low-price environment.
Management is guiding to the following for the year ahead:
- Production of 365kdmt to 450kdmt
- Unit operating costs of A$855 to A$1,045 per tonne
- AISC of A$1,060 to A$1,295 per tonne
- Capital expenditure of A$100 million to A$125 million
Liontown shares are down 12% over the past 12 months.
