Liontown Resources June Quarter FY25 slides: Underground transition drives cost strategy

Introduction & Market Context

Liontown Resources Ltd (ASX:LTR) presented its June Quarter FY25 results on July 29, 2025, highlighting the company’s strategic pivot toward underground mining operations amid challenging lithium market conditions. With spodumene prices falling 36% during the period, Liontown has focused on optimizing operations and preserving cash while continuing its transition to becoming a low-cost producer.

The company’s share price has reflected these market challenges, trading at A$0.85 as of the presentation date, down from its 52-week high of A$1.03 but well above its 52-week low of A$0.42.

Quarterly Performance Highlights

In the June quarter, Liontown produced 85,892 dry metric tonnes (dmt) of concentrate at a grade of 5.2% Li₂O, with lithia recovery at 57%. For the full FY25, the company achieved production of 294,521 dmt at 5.2% Li₂O (equivalent to over 320,000 wet metric tonnes at 8% moisture), slightly below its guidance range.

As shown in the following production data summary:

The company’s Q4 FY25 financial performance showed resilience despite market headwinds. Revenue for the quarter reached A$96 million, with a realized price of A$984 (US$633) per dmt. The company maintained positive operating cash flow of A$23 million for the quarter.

The financial highlights for both Q4 and the full fiscal year demonstrate the company’s focus on operational efficiency:

Liontown ended the fiscal year with a cash balance of A$156 million, down from A$173 million at the end of the previous quarter. The cash movement during Q4 FY25 shows both the operational cash generation and the continued capital investment in the company’s underground transition:

Strategic Initiatives

Liontown’s strategic focus centers on transitioning from open-pit to underground mining, with the open pit scheduled for completion by December 2025. The company commenced underground production stoping on schedule in April and is progressing well with infrastructure development, including the paste plant and ventilation systems.

The company’s strategy is clearly outlined in its three-phase approach:

In response to market challenges, Liontown delivered A$112 million in cost savings and deferrals in FY25, exceeding its target of A$100 million. These efforts included streamlining operations, reducing workforce costs, and deferring non-critical spending.

The underground mining operation is showing promising early results, with excellent ground conditions and good fragmentation. The company has achieved an initial run rate of approximately 0.5 million tonnes per annum (Mtpa) and is on track with its ramp-up plan:

FY26 Guidance and Outlook

Liontown has positioned FY26 as a transition year, with plans to reach 100% underground production by Q3 FY26. The company expects to achieve a lithia recovery rate of 70% by the same period, setting the stage for lower-cost operations in FY27.

The company’s performance improvement plan for FY26 shows a clear progression in underground mining capacity:

For FY26, Liontown has provided the following guidance:

• Concentrate production: 365-450 kdmt
• All-in sustaining costs: A$1,060-1,295 per dmt sold
• Unit operating costs: A$855-1,045 per dmt sold
• Capital expenditure: A$100-125 million

The company expects significant improvements in productivity and cost efficiency as it scales up underground operations. By FY27, Liontown anticipates a 20-25% reduction in unit operating costs compared to FY25:

Financial Position

Liontown maintains a structured debt position to support its operations and development. The company has a A$300 million debt facility from Ford (with a balance of A$336 million including capitalized interest as of June 30, 2025) and US$250 million in five-year convertible notes from LG Energy Solution at a conversion price of A$1.80 per share.

Despite the challenging price environment, the company remains optimistic about lithium demand fundamentals. Management noted that Chinese government policies to curb "neijuan" or "involution" are leading to supply-side restrictions that are tightening physical markets. Additionally, global battery electric vehicle growth continues to outpace expectations, while energy storage systems represent a growing pillar of lithium demand.

Looking ahead, Liontown is focused on maintaining operating discipline to maximize cash flow while preserving expansion options to meet an anticipated market rebound. With its transition to underground mining progressing on schedule, the company is positioning itself to emerge as a low-cost producer in the lithium market by FY27.

Full presentation:

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