Earnings call transcript: Liontown Resources Q1 2025 misses revenue forecast

Liontown Resources Ltd (LTR), with a market capitalization of AUD 18.1 billion and an overall Financial Health Score of 2.76 (rated as "GOOD" by InvestingPro), reported its first-quarter 2025 financial results, revealing a revenue of AUD 104 million, which fell short of the AUD 114 million forecast. Despite this miss, the company showed a positive trajectory in operational performance with a notable increase in lithium recovery and concentrate production. The company’s stock saw a minor uptick of 0.89% following the announcement. According to InvestingPro analysis, investors should note that the company currently has 10 key investment insights available, including important observations about cash management and profitability metrics.

Key Takeaways

• Revenue for Q1 2025 was AUD 104 million, missing the forecast of AUD 114 million.
• Lithium recovery improved by 10% to 64%, with concentrate production up 12%.
• Stock price increased slightly by 0.89% post-announcement.
• Strategic stockpile investment of AUD 103 million indicates a strong future outlook.
• Operating cash flow remained positive at AUD 14 million.

Company Performance

Liontown Resources demonstrated robust operational performance despite missing revenue forecasts. The company increased its revenue by 17% quarter-on-quarter, driven by improvements in lithium recovery and concentrate production. The strategic decision to enhance ore processing capabilities has positioned the company favorably against its industry peers, particularly in handling high-contamination ore.

Financial Highlights

• Revenue: AUD 104 million, up 17% quarter-on-quarter
• Cash balance: AUD 173 million, decreased by 10%
• Unit operating costs: Reduced by 18% to AUD 816 per DMT
• All-in Sustaining Costs (AISC): Reduced by 8% to AUD 10.81 per DMT
• Positive operating cash flow: AUD 14 million

Earnings vs. Forecast

Liontown Resources reported a revenue of AUD 104 million, falling short of the AUD 114 million forecast, marking a miss of approximately 8.8%. This deviation from expectations highlights the challenges the company faces in aligning its financial outcomes with market predictions.

Market Reaction

Following the earnings release, Liontown Resources’ stock price experienced a modest increase of 0.89%, closing at AUD 0.56. This movement suggests a cautious investor response, possibly buoyed by the company’s operational improvements and strategic initiatives despite the revenue miss. InvestingPro data shows the stock has taken a significant hit over the past six months, with a current beta of 0.6, indicating lower volatility compared to the broader market. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading below its intrinsic value.

Outlook & Guidance

Looking forward, Liontown Resources anticipates FY 2026 as a pivotal transition year for its underground operations. The company remains optimistic about continued operational improvements and maintaining a healthy cash balance, even amidst challenging spot pricing conditions.

Executive Commentary

CEO Tony Ataviano emphasized the company’s strategic focus, stating, "We want to move all this OSP material... throw it through the plant because it can take it, and then move ourselves into 100% underground material and let this plant fly." He also noted the broader market challenges, saying, "At these prices, the incentive signal is nonexistent. It will disincentivize exploration, brownfields expansions, and new projects."

Risks and Challenges

• Market Demand: Fluctuations in demand from battery manufacturers could impact revenue.
• Spot Pricing: Current raw material prices may discourage new exploration projects.
• Operational Costs: Maintaining reduced operating costs is crucial for profitability.
• Regulatory Changes: Potential changes in government policies could affect operations.
• Supply Chain Disruptions: Any disruptions could hinder production and delivery.

The earnings call highlighted Liontown Resources’ operational strengths and strategic foresight, despite a revenue miss. The company remains focused on leveraging its competitive advantages to navigate market challenges and capitalize on future opportunities.

Full transcript - Liontown Resources Ltd (LTR) Q3 2025:

Billy, Meeting Moderator: Thank morning, documents relevant to today’s meeting, including more detailed instructions on how to use the platform, select the documents icon. A list of all available documents will appear. When selected, the documents will open within the Lumi platform. You will still be able to listen to the meeting while viewing the documents.

Text questions can be submitted at any time and the audio queue is now open. I will now hand over to Mr. Tony Ataviano.

Tony Ataviano, CEO, Liontown Resources: Thank you, Billy. Good morning, everyone. Appreciate you making the call between the Easter and, Anzac Day holiday. I’m proud to say today that we have got an excellent suite of results to, disclose to the market. With me today helping me present these results are John Laddo, our CFO and Adam Smith, our Chief Operating Officer.

So Billy, without too much more, time, can we go into the slide, please? So the first slide is the, the disclaimer or the important information followed by the summary slide. And if we start with the summary slide, again, it starts with safety. And you will see from the highlight side, we’ve had another strong quarter of safety. And this safety is usually a precursor to good performance.

Good safety almost always aligns with good performance. So that underpins the plant improved performance, and we’re seeing that through our confidence that, as we previously alluded to, we’ve been trialing a lot of the high contamination, lower grade material through the plant because the plant can take it and it’s performing very, very well. And when we get to the section in the plant that Adam will present, you’ll see that for yourself. So we’ve reinitiated the ore sorting and we’ve done some also some underground trials, which have given us very good results. We’re continuing to successfully ramp up.

And as we mentioned in our half year results, we called commercial production in the processing plant, and we’ve commenced underground production on schedule. We’re increasing our sales volumes, which is lowering our operating costs, which has resulted in a net positive operating cash flow. That’s two quarters in a row that we’ve been able to deliver net cash flow from operating activities, which has delivered a very strong and robust cash balance at the end of the quarter. And then finally, we’ve from our inception, we’ve produced over 200,000 tonnes of spodumene at a 5.2 grade. Again, that’s after eight months of operation.

So Billy, if we move to the next slide, we’ve got, our ESG performance. Both our lost time injury frequency rate and our TRIFR have, gone up slightly as a result of, two things, in part mainly because we’ve seen a drop off in the amount of total working hours as part of our construction demobilization. But as operations normalize, we will see that come back into the zone we need it to be. The other point that I wanted to mention is the renewable power. We’ve had over 80% penetration in the quarter, and that’s very encouraging because it keeps our cost of power down to a very attractive level.

And on the right hand side, I wanna draw your attention to this photo. This is a Joao company called NPH run by a very, very impressive young man in Troy. He’s second from your left, And I’ve personally visited this operation. NPH will do all our maintenance on all our light vehicles. It’s one of the largest contracts awarded to Aboriginal Corporation in the Goldfields.

Next slide please, Billy. So just the highlights, I’ll just draw your attention to a couple of key points. Firstly, concentrate production. We’ve increased that by a further 12% from the previous quarter. Again, a very good performance.

The second thing I wanted to draw your attention to is the net cash from operating activities. What makes this even more pleasing to the team is that this quarter, we didn’t have the benefit of capitalized commissioning costs and we’ve incurred a full quarter of royalties. So that’s a particularly strong performance in comparison to our competitors. The second one I want to draw your attention to is lithium recovery. And this is a very important it’s a noticeable increase, 10%.

And we’ve also mentioned in previous, disclosures that during this quarter, we’ve had during the underground trials recoveries of over 70% and producing concentrate over 1,700 ton a day. So it’s very encouraging of what we can look forward to as part of the underground operations when we get going 100% underground. And we see the underground as a point of competitive advantage. The other point to note on this lithium recovery, it’s done on an average, mine grade or lithium grade to the plant of 1.3. The normal view is the higher the feed grade, the better recovery.

The plant is performing where we can feed to it, a lower grade product but still get very strong recoveries. The next two points I want to draw your attention to is the cash on hand. There’s $173,000,000 in the bank at the March. But even better, we’ve got 23,000 tonnes of concentrate at the port ready to put on a ship. And finally, operating costs.

The points I want to draw out here is this operating cost is done on a 6% basis. And please, ask the analysts to normalize this the competitors’ cost to a 6% standard and then compare us. On a U. S. Basis, it’s $512 a tonne, FOB.

On an Aussie dollar basis, it’s 18% lower than the previous quarter. And if we do it on a 5.2% basis to compare ourselves, it’s $7.00 $8 a tonne Aussie. Next slide, please. I’ll now hand over the production side of the quarterly report to

Adam Smith, Chief Operating Officer, Liontown Resources: our Chief Operating Officer, Adam Smiths. Thanks, Tony. I think another strong quarter for the open pit, with just under 2,500,000 tons of ore mined or ore and waste mined through from the pit. Of that sort of 550,000 was ore and a stripping ratio of just over three. Great control drilling was finished in the quarter.

That’s very, very important to finalize the wireframes and the ongoing extraction of the remaining part of the pit. The pit is on schedule to be finished in sort of January, February of next year. And I’ll talk more about that later in terms of the transition from open pit to underground. And we have over 1,000,000 tonnes at 1,300,000 tonnes of ore now, ore and OSP material on the ROM pad, and that’s composed of about 800,000 tonnes of OSP and just over 400,000 of clean ore. The picture at the bottom of the page, I think, sums it up and you can see the various, fingers of ore on the ROM pad, and there’s a large stockpile to right of that picture as well of further ore.

We’ll just go to the next I can just add a couple of points

Tony Ataviano, CEO, Liontown Resources: on this That’s okay. I think the analysts and the investors who have registered their interest on our site visit coming up in June will see firsthand how well organized this ROM pad is, and you can see it from the aerial photograph. The other point that I want to stress again, we’ve gone to great lengths to explain this, is this strategic stockpile, right? 1,300,000.0 tonnes and an investment of $103,000,000 So the operating cost because there’s a lot of accounting adjustments created through inventory and non cash items, this has this is an investment where the capital and the cash has been sunk And we can draw from this stockpile going forward, which will then wash through our operating costs because that’s how the accounting treatment works, but it doesn’t impact our cash balance. It’s an investment that we’ve already sunk.

Adam Smith, Chief Operating Officer, Liontown Resources: Thanks, Tony. In terms of underground, another strong quarter at eighteen fifty meters of development, 53,000 tonnes of clean ore and just over 100,000 tonnes of waste. And that clean ore was development ore, with stoping starting in April quarter. Jumbo productivity, again, another strong quarter at just over 300 meters of jumbo. We expect that to fall backwards a bit in the current quarter now that stoping has happened and there’s a lot more interaction going on underground.

Key infrastructure projects, the heart and soul of an underground mine, will progress during the month, during the quarter with the access way raise bores completed, underground retake completed, underground paste plant is ready to commission fully in May, plus we ran that plant probably 60% of the plant ran for the entire quarter producing dry stack tiles material, which we used in tiles dam upgrades. So that’s really, really positive that that part of the plant is fully staffed, fully manned and fully operational. Race boring activities continue through the quarter for the ventilation and the first raise bore is expected to be finished in the May and we expect the first fan to be installed in the June.

Tony Ataviano, CEO, Liontown Resources: The only other point I’d add to that great summary is this photo of the pigmentsite drive. I mean, you can see from from this picture, it’s 100% ore. This isn’t narrow vein gold mining. That entire drive is ore that we will capture as part of our stoping sequence. The other point we make is, you know, when people present slides such as this, they show the absolute result.

But how does it how does it track against our plan? Well, this quarter, we’re ahead of plan, a 60 meters ahead of plan. So you know, the team on-site are doing a very good job in managing the preparation and what we need to stay ahead of in order to deliver the production.

Adam Smith, Chief Operating Officer, Liontown Resources: Next slide please, Billy. In terms of, the plant performance, I think you can summarize it best in terms of strong availability, at 91% for the quarter and continued improvement in recovery. So we’ve stepped up from 58% in the December quarter to 64% in the March and that’s with 600,000 tons or just under of ore being processed during the quarter. We had a record production month in March, so recovery in March averaged 68% and we had days in March, probably three or four days that averaged over 70%. And that’s including underground ore trials, that’s including OSP ore trials and ore blends and I’ll talk a little bit more about that in proceeding slides.

In terms of where we’re going to now, there’s a number of key initiatives that are underway. One of those is, looking at, regrinding a fraction of our tail stream and this measurable recovery associated with that. We expect to have that in and running in July. So that’s been progressed very, very hard in the quarter. There’s comminution and classification upgrades that we’re following through with, which includes the first of its type particle size distribution online.

We’ll actually have cameras in pipes that are measuring the pipe, the particle sizes. We’ve got a complete new lining system coming for the SAG mill, that’s a twenty six week lead. That’s already been designed and made and we have a proprietary control system going in the mill, all focused on on controlling the the grind if you like better. And then there’s flotation circuit improvements that are underway focused on course and fine recovery. So you can see there’s a real focus on, yes, we’re doing okay with recovery, but there’s a push to get to that 70%.

And the really encouraging thing that Tony touched on a little bit earlier was that when we feed it that sort of 1.5 underground dirt, my god, we get some amazing recoveries and we got 70 plus percent without any optimization. So there’s a lot of room to move there when you combine it with the other initiatives that we’re following up on.

Tony Ataviano, CEO, Liontown Resources: And the only other point that I would add to that summary is that these improvements that we’ve identified, these optimization initiatives, you know, we’ve got a pathway to 70. These initiatives are to reinforce that pathway to 70, make it sustainable and strong, but also go beyond, well beyond 70.

Adam Smith, Chief Operating Officer, Liontown Resources: Okay, next slide. Thanks, Billy. In terms of that underground transition, the big focus of that underground transition as Tony alluded to earlier in the presentation is that stockpiling of that 1,300,000 tonnes of ore that supports the fifteen month ramp up of the underground. It’s been a real focus of ours to establish that stockpile, set up that stockpile in a way that it can be reclaimed, and give the underground chance to ramp up to the run rate that we’ve got in our plans. Key activities in the March, which I’ve touched on was treatment of OSP.

For those, for the benefit of the audience, OSP is basically diluted or contaminated all that ranges between 530% contamination. And that contamination is the host rock, which we call Gaboro, and that is rich in iron, calcium and other bits and pieces that impact on recovery. So we really focused on trials of how we can process that OSP material, and blends of that so that we maximize our recovery, and maintain grades above the 5%. We also did some trials in March of straight underground ore, and as I alluded, we got massive step up in recovery with very little optimization. So we jumped to 70%, in the first day of those trials, which is very, very encouraging.

There was a couple of issues picked up, which we’ve already, got projects underway to rectify, mainly around steel. And we also, did a lot of work, in terms of blends of the OSP with clean ore, and we’ve recommenced sorting as a result of that as Tony has alluded to. So our future blend for the next fifteen months, will include a combination of underground ore as it comes out of the pit, of the underground, sorted material and blended straight OSP. So we’ve got a very clear strategy of what we’re doing with that 1,300,000 tonnes.

Tony Ataviano, CEO, Liontown Resources: And I want to reemphasize, we alluded to in in the previous quarter that we are testing various blending strategies through this plant. What we’re finding is the plant is resilient. We can throw at the plant higher percentages of this Gabbro than others are experiencing. It’s a real competitive advantage. So we’re going to try and push that as much as we can.

So therefore, this OSP material, which typically open pit mines, 30% of what they mine is categorized as OSB. So we can blend this through our plans with a combination of some material which is all sorted and the plant can take it, which is a huge benefit.

Adam Smith, Chief Operating Officer, Liontown Resources: Yeah. So initial initial trialing is is sort of indicating we can process this stuff at least twice what the plant was designed for. So there’s still a scope to go

Tony Ataviano, CEO, Liontown Resources: on that. Now with this product and and and increasing the amount of GABAO in the blend. You know, we’re hoping that our trajectory for the, recovery continues to increase. But, you know, depending on how this goes and how much the plant goes, that could taper a bit.

Adam Smith, Chief Operating Officer, Liontown Resources: Okay, next slide please. In terms of sales, I think 93,005 shipments at 5.2 shipped for the quarter with the biggest shipment being 36,000 tonnes shipped in January, on the basis of 96,000 tonnes produced at 5.1. There was also sales of tantalum at $2.21, dry metric tonnes at about 5% grade at August spot prices. The tantalite is probably one of our bigger other optimized areas in the plant, and there’s a big focus and a project just kicked off on how to improve, tantalum, recovery full stop.

Tony Ataviano, CEO, Liontown Resources: Okay. Thank you, Adam. And now we’ll hand over to John Leavitt, and he’ll go through the operational well, mainly the financial metrics. Okay. Thanks, Billy.

If we

John Leavitt, CFO, Liontown Resources: could turn to the next page, please. Okay. So on the top of Page 13, it shows a summary of some of the key metrics. And as Tony has mentioned, the March saw a 12% increase in production to 95,709 dry metric tonnes and a 15% increase in sales to 93,940 DMT. Grade shift was consistent quarter on quarter at 5.2% and there was a small increase in the average realized price we achieved on an SC6E basis from USD $8.00 6 per tonne sold in the December to USD $8.15 per tonne sold in the March.

Looking at some key financial metrics now, we see that revenue for the quarter was $104,000,000 AUD, which was a 17% increase from the $89,000,000 in revenue reported for the previous quarter. Our cash balance remains strong at $173,000,000 at the March. Overall, our cash balance decreased $20,000,000 or approximately 10% quarter on quarter, with the majority of that decrease being driven by expenditure on underground activities without the benefit yet of the material underground production, which will come in future periods. In terms of our cost metrics, we have unit operating costs in AUD terms, they reduced by 18% from $1,000 per DMT of SC6E sold in the December to $816 per DMT sold in the March. AISC reduced 8% in AUD terms from $11.70 dollars per DMT SC6E in the December to $10.81 dollars per DMT SC6E in the March.

You will note that the 18% quarter on quarter decrease in unit operating costs was greater than the 8% quarter on quarter decrease in AISC. This differential relates to sustaining capital and this occurred because we bought forward a TSF raise that was initially planned for FY 2026 into FY 2025. And this was driven by some underground schedule changes, which changed the timing of pace for requirements, which meant that some more material reported to tailings.

Tony Ataviano, CEO, Liontown Resources: As a result of the November strategy review

John Leavitt, CFO, Liontown Resources: The key factor driving the reduction in unit operating cost metric and the AISC metric for the March was the 15% increase in tonnes sold in the March, where tonnes sold increased from 80,341 in the December to 93,940 in the March. In addition, our gross mining cost was 7% lower in the December as we had 8% less material moved from the open pit, driven by a scheduled reduction in our open pit mining fleet as part of the new mining plan that we announced to the market back in November 24. We have noted in the presentation and the ASX announcement released today that we expect to trend towards the upper end of our cost guidance. At an AISC of AUD $10.81 per DMT SC6E sold for the March, we’re actually under our guidance range at the moment, which is between $11.70 dollars per tonne of SC6E and $12.90 dollars per tonne of SC6E sold. But there are a couple of factors that will push us higher in Q4, and these include the introduction of ore sorting in April 25, which Tony has spoken to.

Also in Q4, we will draw down on our stockpiles as we ramp up our underground activities. So we expect to see a charge to our AISC rather than our credit to our AISC and our unit operating costs that we’ve seen to date. Lastly, we also have an underspend in our forecast sustaining capital projects for the year to date. And we have forecast a catch up of that underspend in Q4. We also have a capitalized deferred waste charge for Q4, as the strip ratio in the open pit increases for the quarter as we mine down to our next ore zone.

So Billy, if I could turn the

Tony Ataviano, CEO, Liontown Resources: If we just finish, sorry, the business optimization initiatives. As we alluded to the market back in November, we identified about $100,000,000 We’re on track to deliver them with $60,000,000 already realized. So that’s the first point. And the second point I’d like to add just to further reinforce on the guidance. Now we’ve introduced ore sorting.

The plant is performing that well. I can’t reassure the market more about its performance. And therefore, we want to throw in some of that OSB material while we can, but that has an accounting impact where we’ve got to while we draw from the stockpile, there’s a charge on the operating costs. So that’s why we’ve given the market that guidance.

John Leavitt, CFO, Liontown Resources: Thanks, Tony. Bill, if you could move across to the next page, please. I’ll now briefly talk about the cash flow waterfall in front of you. So the cash flow waterfall shows in chart form the same information that is in the Appendix 5B cash flow statement that we have released today. It’s a pretty straightforward waterfall and I won’t talk to all of the components, but I will make the following comments.

Firstly, we generated positive cash flow from operating activities, as Tony has mentioned, of $14,000,000 for the quarter. And again, I’d just like to put that in a bit of context. We previously announced that we declared commercial production from the Kaffin Valley processing plant with effect from the 01/01/2025. As a result, this means that this is the first quarter since we commenced production where we have not capitalized any of our operating costs associated with ramping up the processing plant and all operating costs are now reporting to cash flow from operating activities. In addition, this is the first quarter in which we have paid royalties and this cash flow is also shown as part of our operating costs for the quarter.

To put the royalty outflow in context, we made our first sale in September 24 and funds from that sale were received in October 24 along with further sales receipts received in the December. It is the receipt of royalties that crystallize is the receipt of revenue that crystallizes the royalty obligation. And royalties linked to the December are paid in January 25. And so for this current quarter, we also included circa $6,000,000 of cash outflow associated with royalty payments as part of our payments for operating activities. Taking all this into account, we reported a positive cash flow from operating activities for the quarter of $14,000,000 a strong result.

The only other component of the waterfall I will touch on is the cash flows from investing activities, which showed an outflow of $27,000,000 for the quarter and the majority of this related to development expenditure associated with the underground. The waterfall chart shows that we closed the quarter with a strong cash balance of $173,000,000 But just a couple of comments to add here. We also had a shipment that took place on the 03/31/2025 worth approximately $12,000,000 for which we received the funds in April. We also had concentrate on hand of approximately 23,000 tonnes at the end of the quarter. And we also have $25,000,000 on deposit with Export Finance Australia associated with a guarantee required under our power purchase agreement with Senate.

This has been cash back for quite some time and we continue to work with the various parties concerned to have those funds returned to us and replaced with alternative security. This $25,000,000 does not form part of the $173,000,000 closing cash on hand that we’ve reported for thirty one March twenty five. Having said that, I’ll turn it back to Tony.

Tony Ataviano, CEO, Liontown Resources: Thank you, John. Comprehensive as ever. Now if we move to the next slide, Billy. Let’s talk about the market. Okay.

So I want to spend a little bit of time on this. I think you’ve seen from the various other lithium producers that have delivered their quarterly results, We’re all in agreement, and the various forecasters are seeing this as well, that the demand signals are strong, and they will continue to be strong. There are sectors of the battery market that are outperforming. Stationary batteries is one of those. And if we look at recent results from BYD and CATL, profit margins are strong for the end users of our product.

And if you look at the at the views of the world, WoodMac versus CATL, and we got this from their recent, prospectus where they’ve listed on the Hong Kong Exchange, their view as a battery producer is far, far stronger than the forecasters. So they’re seeing an 83% increase on EV demand over the next five years, but they’re seeing an even stronger increase in stationary batteries. So what is happening here? Why aren’t we seeing a corresponding increase in the price of raw materials? And the fundamental reason as we see it here in Linetown is the length of the battery value chain.

There is inventory scattered throughout the the value chain, and it’s that inventory that buffers. So if you have a demand increase, a demand signal, it will take time to work through the inventory that’s contained in the battery value chain. So you have inventory at the car manufacturers. You have inventory in the battery producers. You have inventory at the PCAM and so on at the refineries.

And until that works through, we won’t see an impact to the price directly. But the positive angle is the demand signal is strong. Now on supply, I can tell you that at the current prices, the incentive signal is nonexistent. It will disincentivize and it has disincentivized exploration, brownfields expansions and new projects. And we know having done this ourselves, it will take years for new greenfields capacity to come on even if they started today.

So at some point, this will correct and correct strongly because you cannot suppress the raw material supply as it’s currently being done for as long as they anticipate without a material impact, and we’re seeing that. And we know a number of players right across the battery value chain, the refiners, the Pecan producers, they’re not making money. So we’re encouraged about the short to medium term in terms of demand signals, but we see a turnaround coming because at these prices, we won’t see new supply. So that brings our presentation to an end. Thank you, everyone.

And now we’ll open up to Q and A.

Billy, Meeting Moderator: Thank you, Tony. If you have not yet submitted your text questions or joined the live audio queue, Our first question is from John Bishop, Jardan Group Australia. John, please go ahead after the beep.

John Bishop, Analyst, Jardan Group Australia: Good morning, guys. Thanks very much for taking my questions. Firstly, congratulations on the continued impressive ramp up. I think technically the performance of the operations very commendable and obviously bearing out the results. Well done, well done to the team in that regard.

Obviously, lithium prices at the moment aren’t doing you guys much by way of favor. So I guess my first question is around, obviously, the guidance you’ve indicated at the top end of the cost range for the fiscal year or for the June, which worked out at current exchange around US825 dollars per tonne, SC6 equivalent. Obviously, fast markets are now printing with a seven handle. And the all in sustaining cost is obviously impacted a little bit by stockpile movements and accounting treatments, but it also doesn’t fully factor in the underground or the freight element. So very long winded question, but what sort of additional elements are you looking to manage that cost and I guess ensure that you can maintain operating free cash flow?

Tony Ataviano, CEO, Liontown Resources: Thanks, Bish. I’ll take that and let the team chime in. There’s a couple of points to unpick your question. Firstly, I want to sort of head off the cost of the issue of underground costs. Our guidance already factors in three months of underground production, so that’s the first thing.

So there’s some amount of underground production costs built into that. The second point that I’d like to make is currently, we are incurring the cost of open pit and the cost of underground together. But once this year finishes, this calendar year finishes, the operating costs associated with the open pit will disappear. So I’m not sure the market has taken that into account that we’ll be just solely underground mining after the end of this calendar year. Now in terms of where we are in our cost structures, we believe now that we’re building an operating database and operating know how, we will continue to look for efficiencies and productivity improvements.

And we’ve got a number of initiatives underway or will be underway in the new financial year in order to deliver those operational benefits. We did a first pass in November when we released our strategic review, And this is an ongoing exercise. So we believe we’ve got more room to move. You know, one, for example, is reagents. Reagents form 20 to 25% of our processing costs, And we’ve got a number of alternatives that we’re currently testing to reduce those costs.

There’s better purchasing. We will go through because a lot of our contracts were signed at the peak of the market, and there’s an opportunity now to renegotiate a lot of the consumables and input costs. So they’re just two examples, Bish, of further operational improvements and efficiency we can derive.

John Bishop, Analyst, Jardan Group Australia: Can I just add something to that just around the all in cost then? I mean, I know we’re still pending guidance for fiscal twenty twenty six. I respect that to work in progress. But you able to give us some steer or an update as to what you think the capital number looks like through fiscal ’twenty six to establish a steady state underground operation?

Tony Ataviano, CEO, Liontown Resources: Well, the main cost of an underground operation is the upfront development. And we’re sinking that CapEx now, right, so that once we get into operations, we’ve got the headings and the drives open. So a lot of that investment, Bish, is already happening. So whilst next year, we’ve already alluded to the market that it’s a transition year and the operating costs will trend higher, We believe on the CapEx for our development, it will be sustained and potentially in the future it is come off as we get into that higher margin zone in the ore body, which is thicker and therefore the development’s already being done.

Billy, Meeting Moderator: Our next question comes from Kate McCutcheon from Citibank. Kate, please go ahead.

Kate McCutcheon, Analyst, Citibank: Good morning, Tony and team. Just the processing physicals, just explain how they’ve been restated. So previously, December was 620,000 tonnes milled, and now that’s five fifty five, so you’ve lost 10% of tonnes. What is driving that big reconciliation difference there? And has that been resolved?

Tony Ataviano, CEO, Liontown Resources: Yes. So a couple of points there. Yes, it has been resolved. What we typically do in the normal course of events is routine reconciliations and the mass balances across the plant from ship to ROMPAD. And in the course of that full reconciliation, once we started once we called commercial production January 1 as part of our half year results, we did the flyovers and the surveys and checked imbalances.

We found that there were some bits of the instrumentation in the plant, wait time is in conveyors that were giving us an over call on, production, and we’ve corrected for that. And there’s no impact on sold tons. They are what they are. We’ve reported it. But on the, mill feed, given the white Tomato discrepancies And on the concentrate conveyor into the shed, there were some anomalies on the weightometers, and we’ve corrected for that.

Kate McCutcheon, Analyst, Citibank: Okay. Got it. So fixed now. And then just thinking about the cash position into the end of the FY, you’ve noticed that the stockpiles cost $103,000,000 to build per se, so there’s an adjustment to cash when that’s fed. Can you give us some color around how much of the stockpiles do you expect to feed over the next three, six, nine months or what that profile looks like to help us correctly model that p and l versus cash adjustment?

John Leavitt, CFO, Liontown Resources: Yeah. Sure, Kate. So we do expect to see a pretty significant drawdown in stockpiles across the June. Circa sort of 500,000 tons, something like that. And then broadly speaking, we sort of expect to see that stabilize Well, sorry, that will take you to FY 2025.

And then there’s a smaller drawdown as we move into FY 2026. So, know, and when I say smaller, it’s, you know, several hundred thousand tons or something like that. That’s for the first half of FY twenty twenty six. We do continue to draw down the stockpile across FY 2026, but we still retain a stockpile balance at thirty June twenty six.

Tony Ataviano, CEO, Liontown Resources: But we’ll give all that as part of our guidance. Thank

Billy, Meeting Moderator: you. Our next question comes from Adam Baker from Macquarie. Adam, please go ahead.

Adam Baker, Analyst, Macquarie: Good morning, Tony, John and Adam. Just on Kathleen Corner Open Pit, it’s going very well for you guys. Good to hear that it’s going till February next year. Just wondering how many tonnes are left to be extracted from the pit, please, ore tonnes?

Adam Smith, Chief Operating Officer, Liontown Resources: I’m trying to remember. I’m going to have to get back to on that, Adam.

Adam Baker, Analyst, Macquarie: Yes, no problem. So I can reach out after the call. And just maybe on sustaining CapEx, two half FY twenty twenty five guidance between 55,000,000 and $63,000,000 Just wondering how much there was in the 3Q. You’ve got the $6,000,000 royalties, but just sustaining CapEx as a line item itself, does around $19,000,000 sound about right?

John Leavitt, CFO, Liontown Resources: For the third quarter, the March? Yes. No, it’s lower than that, Adam. So I’d I’d

Adam Baker, Analyst, Macquarie: So it’d the catch up in the ’40.

Tony Ataviano, CEO, Liontown Resources: Yeah. And John’s alluded Yeah.

John Leavitt, CFO, Liontown Resources: We do. There there is definitely so we’ve had a a sort of a an underspend on our CapEx and, you know, we have forecasted catch I’d like to catch up, but let’s see how much of that eventuates.

Adam Baker, Analyst, Macquarie: Okay, thank you.

Billy, Meeting Moderator: Our next question comes from Hayden Bairstow from Argonaut. Hayden, please go ahead.

Hayden Bairstow, Analyst, Argonaut: Good morning, guys. Tad, just a question on the underground. I mean, reserve grade is lower than what you sort of talked about in this development grade that you’ve delivered already and you just started stoping. Mean, what can you give us any guidance on the early sort of grade profile of the underground as you go through this ramp up phase? Or can you focus on higher grade areas?

Adam Smith, Chief Operating Officer, Liontown Resources: Initial grades, I think, point four to 1.6 in that range.

Tony Ataviano, CEO, Liontown Resources: Some of the upper zones

Hayden Bairstow, Analyst, Argonaut: you sustain that for?

Adam Smith, Chief Operating Officer, Liontown Resources: That’s pretty much all of I think FY ’26, the underground ore is similar. Yep.

Hayden Bairstow, Analyst, Argonaut: Yes. Okay. And then just on the discussion around sort of the CapEx catch up. I mean, what are we spending on in the fourth quarter that you haven’t that you sort of pushed out that’s material? Or as you sort of alluded to, is it likely that that CapEx guidance, if anything, you’ll fall short of it, that we have a more at ’26?

John Leavitt, CFO, Liontown Resources: There’s basically two components there, Hayden. There’s the, sustaining CapEx in the plant, which where we’ve traditionally seen an underspend today. So we bought some of that forward. But the other piece is, as we mentioned, are moving out of the ore zone, our strip ratio increases. And so we’ve got some, capitalized deferred waste as well for Q4.

Billy, Meeting Moderator: Thank you. Our next question comes from Glyn Lawcock from Barron Joey. Glyn, please go ahead.

Glyn Lawcock, Analyst, Barron Joey: Good morning, Tony and team. Firstly, could you make any comments around how the blast went in your first stope? I mean, there’s obviously been lots of concerns around how it may go, whether it will fracture. You obviously talked to us about having the thin layer around the outside, which will give you some benefits. So just how does that actually physically gone?

Tony Ataviano, CEO, Liontown Resources: That’s a very good question, Glenn. And both Adam and myself spent the weekend last weekend on-site so that we could go and have a look at the first stope and the blast. And we were very, very happy. It was clean breaks, exactly how we predicted it. The team’s got some more fine tuning and optimization.

But, the fragmentation, I’ll let Adam speak of it, but it was it was almost like

Adam Smith, Chief Operating Officer, Liontown Resources: Yeah. I think we’re calling it sugar. Sugar. Yeah. Really, really, really good fragmentation, very clean breaks.

They’re looking at revising some of the way they drill underground in terms of the over drill. They’re looking at how they how much of a skin they leave. But certainly, recovery from the stope was excellent, and there’s a lot of learnings from that stope. That initial stope was about 12,000 tonnes to put it in perspective. It’s fairly small one from what we’re going to see going forwards.

But, yeah, very, very encouraging.

Tony Ataviano, CEO, Liontown Resources: And the other point that we would make is, again, this is the differentiation between narrow vein mining of gold versus what we’re doing. That one stope, that 12,000 tonnes, that’s two days of production just from one stope, and that’s just baby stope. We’ve got stopes coming up in the next financial year where they’re close to 80,000 tons. So this is an opportunity for this mine to really get economies of scale. And we’ll be doing a little piece on this as part of our next presentation coming out of the Macquarie Conference and going into Diggers.

Glyn Lawcock, Analyst, Barron Joey: Okay. Thanks, Tony. And then if I could just follow-up. If I just look at the cash flow statement for the quarter, dollars 94,000,000 roughly spent excluding the money on CapEx and there’s obviously a little bit of sustaining in that. If I take the $94,000,000 and divide by your SC6 volume, I actually get closer to AUD 1,200 a ton, not the AUD 1,100.

Is that because you’re capitalizing some costs that are not coming through? So on a true cash basis, it’s actually higher than what you’re reporting?

John Leavitt, CFO, Liontown Resources: Let me Glenn, perhaps I’ll give you a call after this. That’s a tricky question to answer on the fly. I can certainly assure you that our AISC is calculated correctly. If there is some differences to to cash flow, obviously, you’ve got the differences between gas and accrual.

Tony Ataviano, CEO, Liontown Resources: Yeah. So And drawdowns of stocks.

John Leavitt, CFO, Liontown Resources: Yeah.

Tony Ataviano, CEO, Liontown Resources: Yeah. Or or building stockpiles impacts it. Yeah. So there’s an inventory component. So I wouldn’t use your skid maths as indicative, Clint.

Billy, Meeting Moderator: Thank you. Our next question comes from Levi Spry from UBS. Levi, please go ahead.

Levi Spry, Analyst, UBS: Good day, team. Thanks for

Adam Baker, Analyst, Macquarie: your

Levi Spry, Analyst, UBS: time. So I guess if as we think about heading into FY 2026 guidance, can you just talk through some of the things you’re thinking about? Recoveries are obviously trending well, but it’s at a 5.2%. So is that the starting point?

Tony Ataviano, CEO, Liontown Resources: Yes. I think where we’ve got to, Levi, is as you recall, we’ve been looking at what is the optimal, concentrate grade that we’ll probably target on an ongoing basis, and 5.2 to 5.3 is the range, in line with our competitors. In terms of other

Levi Spry, Analyst, UBS: things we’re

Tony Ataviano, CEO, Liontown Resources: foreshadowing in FY 2026, we continue to look at ways of, ensuring that the ramp up of the underground occurs more efficiently and effectively. So that’s an ongoing improvement. The plant, I’ve already touched on a few parts of the plant that we’re looking at improving. So there’s, you know, better reagents, more cost effective reagents. All those will be factored in as part of the FY 2026.

But again, I sort of stress that it is a transition year.

Levi Spry, Analyst, UBS: Yes, got it. Okay. Thank you. And then I think some of the previous questions are sort of dancing around the cash flow waterfall. So we’re trying to work out what that might look like this quarter and then obviously next year.

So can you just talk to me about what is the cash flow from investing activities, waterfall there, so underground development sustaining project, what that could look like this quarter? And I guess the lease stuff, shouldn’t have repeats. What about the other items like interest and stuff?

John Leavitt, CFO, Liontown Resources: Perhaps if I just take a step back, Levi, I mean, I suppose what your question your question really is about our cash balance, I’m assuming. So you know, we’ve we’ve taken a, you know, we’ve taken a pretty prudent view in relation to the current pricing environment and our internal models, we’ve allowed for spot to continue for quite some time. And our and our models show that, you know, even with those assumptions incorporated, we still we’ll get to 30, we’ll still have a healthy cash balance and beyond as we progress into FY 2026. Obviously, if the current pricing continues for years, then us as with every other lithium producer, we’ll have to revisit it. But as we sit here today, we have allowed for current spot pricing to continue for an extended period of time and remain comfortable.

Tony Ataviano, CEO, Liontown Resources: Yes. The other point that I’d say, in terms of what is the next quarter in terms of sustaining capital. So that $27,000,000 cash burn that we had in that category, John’s already alluded to that there’s potentially some, sustaining capital that we’ve brought forward and there’s some catch up to be done. So there may be a little bit extra there, but nothing material.

Billy, Meeting Moderator: Thank you. Our next question comes from Milan Tomic from JPMorgan. Please go ahead.

John Bishop, Analyst, Jardan Group Australia: Yes. Hi, team. Thanks for the call. I just had a question on the interest payments. So that there were only $1,200,000 for the quarter.

Your debt’s about circa $800,000,000 plus a very low rate. Are you just able to provide a bit more clarity on what those interest payments are going to be moving forward? Is there a catch up payment that we should account for in the future dates?

John Leavitt, CFO, Liontown Resources: Yes, sure. Thanks the question. I mean, at the moment, all of our interest payments sorry, all of our interest payments are capitalized. So we don’t have any cash outflow associated with interest payments either under our debt with Ford or our debt with LG. So and in terms of cash interest payments going forward, basically, the commencement of interest payments under the Ford debt facility will commence when the offtake commences.

So that is, I

Tony Ataviano, CEO, Liontown Resources: think September.

John Leavitt, CFO, Liontown Resources: That’s September in the September 25 quarter. And in terms of interest payments across FY 2026, they’re relatively modest. We sort of expect sort of in terms of cash interest payments, 4,000,000 a quarter, something of that range.

Tony Ataviano, CEO, Liontown Resources: But that 1,000,000, isn’t that an inflow? That’s interest of

John Leavitt, CFO, Liontown Resources: The million dollars? Yeah. It’ll be inflow. It’s a net inflow,

Adam Baker, Analyst, Macquarie: isn’t it? That’s a look. Yeah.

Tony Ataviano, CEO, Liontown Resources: From our accounts? Yep. And interest on our cash

John Bishop, Analyst, Jardan Group Australia: Yes.

Billy, Meeting Moderator: Next question comes from Anthony Bridge from Platts. Anthony, please go ahead.

Tony Ataviano, CEO, Liontown Resources0: Yes. Hello. Just regarding Anthony Albanese, talking about the Critical Minerals Strategic Reserve. Just wondering whether you think lithium should be included in that because I haven’t announced details of that yet. And whether you think it’s a general good idea, whether it could promote investment as Aimet has?

What are your thoughts?

Tony Ataviano, CEO, Liontown Resources: Yes. Thanks for the question. Look, you can appreciate we’ve been focused on our quarterly and presenting, and they’ve got announced today. So we’re not across the detail and exactly what the Prime Minister has presented and disclosed to the Australian people. So give us a little bit of time to review that, and then we’ll have a position.

Tony Ataviano, CEO, Liontown Resources0: That’s okay. Just regarding your operations, the things that are impacting your operations. Think Dale from PLS the other day talked about tariff related uncertainty could affect the financing and development of new lithium projects. Just wondering whether you’re you suspect that may be the case as well. And if so, give us some flesh on that.

Tony Ataviano, CEO, Liontown Resources: Look, put tariffs to one side. The price itself and given that you guys reported, that’s a big enough disincentive for future projects. So I think we need to worry about that first rather than everything else.

Billy, Meeting Moderator: Thank you. Our next question is a text question from Brad Johnson, a private shareholder. What is your take on the demand side for lithium over the next twelve months?

Tony Ataviano, CEO, Liontown Resources: Brad, thanks for being a shareholder. Appreciate your support. Look, as far as we’re concerned, we’ve already alluded to that in my market slide, we’re very, very strong on demand for the next twelve months and for the next decade actually. And it’s not just our perspective, we’ve got an in house view, but what we see in the market, the biggest battery producer in the world showing a very strong forecast for battery demand in the next, five to ten years. And even if cattle’s view was halved, it’s still a tremendous growth path.

And as I said, it will take time for it to ultimately flow through a very long supply chain to get to the raw materials, given how much inventory is it contains at each part of the supply chain. So you need to watch that through first before you see an impact on price of raw materials.

Billy, Meeting Moderator: Thank you. Our next question is a text question from Anthony Barrett from Platts. The CEO of PLS said tariff related uncertainties may create headwinds for fundings and development for the new lithium supplies. Do you agree with this?

Tony Ataviano, CEO, Liontown Resources: I think, Billy, we’ve heard from, Mr. Platts already. So I think I’ve answered that question.

Billy, Meeting Moderator: Next question is an audio question from John Bishop. John, please go ahead.

John Bishop, Analyst, Jardan Group Australia: Thanks for taking my follow-up. Just a couple of questions probably embedded. You quoted in the press recently in Western Australia about accessing the WA’s state government lithium support package. Are you able to comment as to where that’s at?

Tony Ataviano, CEO, Liontown Resources0: Hello?

Billy, Meeting Moderator: Apologies. We are having some technical difficulties. Tony, can you hear me?

Tony Ataviano, CEO, Liontown Resources: Yes. We can, Billy, but I didn’t get Vish’s second question.

Billy, Meeting Moderator: No worries at all, John. Could you please go ahead and repeat your question?

Adam Baker, Analyst, Macquarie: Okay. Can you hear me?

Tony Ataviano, CEO, Liontown Resources: Yep. Loud and clear, Vish. That signal at Roto, is not Yes.

Adam Baker, Analyst, Macquarie: You were I

John Bishop, Analyst, Jardan Group Australia: wish. It’s not a great day either over here. Not a good day for Roto. Look, you were quoted in the press recently talking being flagged as particularly accessing the WA state government critical minerals or lithium support package. Are you able to comment on where that process is at, please?

Yes, I am.

Tony Ataviano, CEO, Liontown Resources: We’ve had a really positive engagement with the government on this, and we’re working towards concluding those discussions, and we’ll make an announcement on that in due course.

Adam Baker, Analyst, Macquarie: Okay. Can I just have

John Bishop, Analyst, Jardan Group Australia: a quick follow-up to that? Just regarding your forward payments, which start next fiscal year, are you also having discussions with forward around potentially deferring the principal repayments?

Tony Ataviano, CEO, Liontown Resources: Look, I’m probably not at liberty to announce very confidential discussions, but we’re in constant current dialogue with all our customers around a whole range of things. So, you know, Ford is not unique, but we are talking to all our customers about the current situation.

Billy, Meeting Moderator: Thank you. That is the last question we have time for today. I will pass back to Tony for some closing remarks.

Tony Ataviano, CEO, Liontown Resources: Thank you, Billy. Thank you to, the people that have dialed in to the great questions. For those that will follow-up, we’ll do that. Leanne, Kite, will follow-up and provide you those responses. Again, in summary, I think we are doing our very best to ramp up the plant and get it to a stable situation.

We’ve done that. We’re now moving our focus to the underground. We want to make the underground a winner. We do believe the underground will give us a competitive advantage longer term, especially around ore hygiene and fragmentation. And the grades that we’re seeing in the underground, as Adam has already pointed to, work very well through the plant.

So I wanna move all this OSP material, all this low grade, high contamination material, throw it through the plant because it can take it, and then move ourselves into 100% underground material and let this plant fly. So thank you for everyone for listening, and we’ll, sign off from here.

Billy, Meeting Moderator: Please reach out to the Liontown team if you have any follow-up questions. You may now log out.

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