Liontown Q1 FY26 slides: Revenue drops 29% amid mining transition strategy

Liontown Resources Ltd (ASX:LTR) shares plunged 12.6% following the release of its September Quarter FY25 results presentation on October 28, 2025, as investors reacted to a significant revenue decline despite operational progress in the company's strategic transition to underground mining.

Introduction & Market Context

Liontown's quarterly update revealed a 29% quarter-on-quarter revenue drop to A$68 million, primarily attributed to lower sales volumes due to port congestion and backward-looking pricing mechanisms. The lithium producer's stock closed at A$1.057, down from the previous close of A$1.21, reflecting investor concerns about rising costs during the company's transitional phase.

Despite the challenging quarter, management emphasized that the results aligned with their guided strategy as the company shifts from open pit to underground mining operations at its Kathleen Valley project.

Quarterly Performance Highlights

The September quarter showed mixed results across key operational and financial metrics. Concentrate production reached 87,172 dry metric tonnes (dmt) with a weighted average grade of 5.0% Li₂O, while sales totaled 77,474 dmt across four parcels.

As shown in the company's quarterly highlights:

Plant availability remained strong at 92%, with 580,000 dmt processed during the quarter. However, lithium recovery rates averaged 59%, impacted by the company's Ore Sorting Potential (OSP) feed strategy during the underground transition. Management expects recovery rates to improve as cleaner underground ore increasingly dominates mill feed.

The company reported significant progress in its underground mining operations, achieving a 105% increase in underground ore mined compared to the previous quarter:

"Underground ramp-up is rapidly scaling and on track," stated the company in its presentation, highlighting that underground operations achieved a 1 million tonnes per annum (Mtpa) run-rate on schedule in September. The paste-fill and primary ventilation systems are fully commissioned and performing to design specifications.

Strategic Initiatives

Liontown's strategic focus remains on completing its transition from open pit to underground mining operations. The company reported that waste stripping was the key focus this quarter, with mining advanced to expose the final clean ore zones in September. The open pit is on track for completion in the December quarter, allowing full transition to underground operations.

The company's presentation outlined its business optimization initiatives across three workstreams:

Management emphasized that these optimization efforts are designed to improve productivity and drive lower costs as the operation matures. The company also highlighted changes to its offtake agreements that afford greater strategic market flexibility.

Forward-Looking Statements

Liontown characterized FY26 as "a tale of two halves," with performance expected to improve in the second half as underground operations ramp up:

For FY26, the company provided guidance reflecting the transition to underground mining, with unit costs expected to trend lower from FY27:

The company maintains a positive long-term market outlook, citing Bloomberg New Energy Finance forecasts that project global EV sales to reach 39 million units by 2030, implying a compound annual growth rate of over 14%. Additionally, Battery Energy Storage Systems (BESS) are expected to contribute 25% of total lithium demand growth to 2029.

Detailed Financial Analysis

The quarter ended with a cash balance of A$420 million, bolstered by the August capital raise and amendments to the Ford debt facility that deferred near-term debt repayments. The company also reported having 20,912 dmt of saleable concentrate inventory on hand.

Unit operating costs increased to A$1,093 per dmt sold (FOB), up from the previous quarter due to the planned drawdown of OSP stockpiles and lower recoveries. All-in sustaining costs (AISC) rose to A$1,354 per dmt sold (FOB).

The following chart details the cash movement during the quarter:

The company's realized price for the quarter was A$1,067 (US$700) per SC6.0 dmt, reflecting challenging market conditions in the lithium sector.

Despite the revenue decline and rising costs, Liontown's management remains confident in the company's strategy, emphasizing that the current quarter represented a planned transition point, with performance expected to improve in subsequent quarters as underground operations fully ramp up and recovery rates increase with cleaner ore feed.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.