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Liontown Resources Ltd reported its fourth-quarter 2025 earnings, revealing a mixed financial performance. The company generated a positive cash flow of $23 million, despite an 8% decline in revenue quarter-on-quarter to $96 million. According to InvestingPro data, the company’s overall financial health score stands at 2.93 (GOOD), though current analysis indicates the company is quickly burning through cash. The earnings call highlighted strategic advancements and market dynamics affecting the lithium sector. The company’s stock price fell by 1.73% to $0.865, reflecting investor concerns over declining lithium prices and inventory adjustments.
Key Takeaways
- Liontown Resources achieved positive cash flow of $23 million in Q4 FY2025.
- Revenue decreased by 8% quarter-on-quarter to $96 million.
- The company adjusted inventory value by $75-85 million due to low lithium prices.
- Stock price declined by 1.73% following the earnings report.
- Production guidance for FY2026 set between 170,000 and 250,000 tonnes.
Company Performance
Liontown Resources demonstrated resilience by generating positive cash flow in Q4 FY2025, despite a challenging market environment. The company faced an 8% drop in revenue, attributed primarily to lower lithium prices. However, the successful production of 320,000 wet metric tonnes of concentrate over 11 months and a high plant availability rate underscore operational efficiencies.
Financial Highlights
- Revenue: $96 million, an 8% decrease from the previous quarter.
- Positive cash flow: $23 million.
- Closing cash balance: $156 million.
- Inventory value adjustment: $75-85 million due to declining lithium prices.
Outlook & Guidance
Looking ahead, Liontown Resources has set ambitious production targets for FY2026, ranging from 170,000 to 250,000 tonnes. The company aims to achieve a 70% recovery rate by Q3 FY2026, focusing on cost optimization and inventory management. InvestingPro analysts anticipate sales growth in the current year, though profitability remains a concern. Expansion plans remain contingent on market conditions, reflecting a cautious yet strategic approach to growth. For detailed growth projections and expert analysis, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Executive Commentary
CEO Tony Otteviano praised the company’s efforts, stating, "We’ve delivered 320,000 tons of concentrate in eleven months, which is an outstanding effort." Chief Commercial Officer Grant Donald highlighted the growing demand for lithium, noting, "One out of every four incremental units of lithium demand over the next five years is going to battery energy storage."
Risks and Challenges
- Market Volatility: Fluctuating lithium prices could impact revenue and profitability.
- Inventory Valuation: Adjustments in inventory value may affect financial stability.
- Production Targets: Achieving ambitious production goals may pose operational challenges.
- Global Competition: Increasing competition in the lithium sector could pressure market share.
- Regulatory Environment: Changes in environmental regulations may affect operational costs.
Liontown Resources remains focused on navigating these challenges while leveraging its strategic initiatives to capitalize on the growing demand for lithium in the electric vehicle and battery storage markets.
Full transcript - Liontown Resources Ltd (LTR) Q4 2025:
Conference Moderator: Welcome to Liontown Resources’ June Quarter Results Call. Following the formal presentation, there will be a Q and A session for investors, analysts and media. Participants can ask both text and live audio questions during today’s call. To ask a text question, select the messaging icon, type your question in the box towards the bottom of the screen and press the Send button. To ask a live audio question, press the Request to Speak button at the top of the broadcast window.
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A list of all available documents will appear. When selected, the document will open within the Lumi platform. You will still be able to listen to the meeting while viewing the documents. I will now hand over to Mr. Tony Otteviano, Managing Director and CEO of Linetown Resources.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Good morning, everyone, and thank you for joining the Linetown quarterly and our full year results presentation. Joining me is Graham Pettit, our Interim CFO Adam Smiths, our Chief Operating Officer and Grant Donald, our Chief Commercial Officer. If you can move to the first slide, please. That’s the usual disclaimer. And now I’d like to set, the context for today’s presentation.
And before I do that, I think it’s important that we sort of reflect on the years just gone. I mean, we started production in July. But if we look at the macro environment, we’ve seen the price of spodumene fall 36%, and it’s fallen even further in the last quarter. But notwithstanding, we’ve seen some green shoots in the last couple of weeks. It’s a very volatile environment, and it’s just best reflected by the fact that the spodumene price went up $60 a ton on Friday, and it came down $50 a ton last night.
This is the macro environment we’ve had to ramp into. And what we can control is the way we perform in our business. And we’ve got to execute and execute well. And we’ve seen that through two operational levers that we’ve had to pull. Firstly, our business optimization and we’ve got a slide in that today.
And secondly, the performance of the plant. We’ve effectively ramped up the plant in six months and then had five months to optimize the plant so that it can treat our strategic stockpile that we’ve spoken about. And we valued that stockpile of six months ago at $93,000,000 and that stockpile is a combination of our open pit, some underground ore and our OSP material, which is effectively our low grade, high grade raw material. So the plants had to we’ve had to tune the plant in order to understand the operating settings that will see us go into FY 2026. And notwithstanding that, if we look at our demonstrated capability, we’ve delivered 320,000 tons of concentrate in in eleven months, which is an outstanding effort for our plant in ramp up.
And that’s 294,000 on a dry basis because that’s what we get paid on. But in terms of physical production, we produced over 320,000 tons. The underground operation has commenced on schedule. We’ve delivered $125,000,000 of cost savings and deferrals against the $100,000,000 target, and we’ve got a robust cash balance of $156,000,000 and we’ve delivered on our second half guidance for all in sustaining costs. But even more pleasing, in this last quarter, our net cash flow from operating activities was a record of $23,000,000 We’ve also provided in this presentation our look ahead for FY 2026.
And we’ve said for some time that FY 2026 is a transition year as we, as we bring the open pit to closure and we ramp up the underground. We’ve also had to continue our business optimization because of the market and the way it is. And then finally, the last point, we must maintain a relentless focus on maximizing value. The focus on cash, and we’ll continue to do that in FY ’26. But we’ve also got one eye on the future, and all our expansion options are preserved in the event we see a market rebound.
Next slide, please. Next one, please. Okay. Here’s a summary of FY ’25. You know, we’ve further strengthened our ESG credentials, and we’ve got a slide that shows that today.
As I’ve mentioned, we’ve produced over 320,000 tonnes of concentrate, and we’ve done that in eleven months and the plant has ramped up and performed reliably and has given us flexible options, which we’ll talk about later in the presentation. We’ve commenced our underground operations and there’s no surprises there. Things are progressing well. And those of you that are on the site visit on Thursday, you will see that firsthand. And we’re on track to conclude our underground operations in, the end of this year and we’re responding very quickly to a volatile market as demonstrated in our cost savings to date and the way we’ve preserved cash.
Next slide, please. Okay, ESG. At a headline level, we’ve hurt less people this year than we did last year. In fact, we’ve hurt less people in the last quarter than we did last year. But the results are not where they need to be, and we will continue to focus on this.
It’s an ongoing focus, actually. But the pleasant thing is not only are we focused on lag indicators like TRIFR and lost time injury frequency rate, We’re also getting our leadership focusing on the lead behaviors, the observations that we need to do, the field leadership we need to do. On the ESG front, consistently, we are delivering between 7982% renewable power into our operations. There are times where we run solely a renewable power for a day or so. And our diversity, we continue to maintain the focus on getting equality of gender in our workplace, but more importantly, diversity of thinking.
Next slide, please. So I will now turn to Adam Schmidt, who will talk through the physicals that we delivered not only for
Adam Smiths, Chief Operating Officer, Liontown Resources: the quarter but also for the year. Thanks, Tony. Good morning, everyone. I think the number one point I’d like to make, read this slide is that as Tony has already alluded to, we’ve only been in operation eleven months. That’s not a defensive comment.
That is just a statement of fact. And these figures very much reflect certainly the annualized figures reflect the annualized and how we’ve done over the last eleven months from start up of a brand new operation with a brand new team, with a brand new plant, and ramping it up at that time. In terms of the quarter that’s just gone, just over 85,000 tons of concentrate produced sales of just under a 100,000. Lithium recovery this quarter was a little bit down versus, q three. And we flagged that in q three where we said we were gonna deliberately reprocessing our OSP, and I’ve got a little bit about that later in the slide deck.
We processed just over 600,000 tonnes of ore through the processing plant. That’s a run rate of about 2,500,000 tonnes per annum on an annualized basis. And June alone represent an annualized run rate of about 2,700,000 tonnes. So you see you’ve got this brand new plant that is already running it, so I’m not far off nameplate. In terms of the year, as Tony has alluded to or mentioned, 320,000 wet metric tonnes of concentrate produced in eleven months.
Without being anecdotal, we don’t know how many more startups have produced that in the first year of operation. Concentrate sales of just under 300,000 annual recovery 58%, and that was a tale of two halves. So half one was 55, half two was 60. We processed, just over 2,000,000 tonnes, again, a tale of two halves. Half one was about 800,000, half two was 1.2.
So you can see that the steady improvement and the continuous improvement in the plant through that period. The other thing that isn’t on this slide, but it’s it’s really critical to mention and I think it really, reinforces the money and the time and the effort we spent in the in the early phase of the project is our availability for the plant for the second half of twenty twenty five was 93%. So just think about that for a second, brand new processing plant, 93% availability and very much the newness has worn off in half two. So not only, was it built well, but it’s been maintained and operated well. And I think that’s a key point to make.
Terms of, next In slide, terms of underground, this is very much a key focus of everyone, Tony down. And the key the key focus is getting that underground to ramp up because as Tony said, the open pit finishes in December. And underground is very much about being ready. You can’t just turn underground mine up and and expect it to, produce the tons. You have to plan.
And we’ve been planning for years to be where we are today and the infrastructure that’s going in and the, development that’s going in is all planned well and well and truly in advance. What we are seeing now that we’re on underground and we have done significant development is the ground conditions are excellent. We thought they were excellent from the geotech work. They’re proving to be excellent. Our mesh and molding and and the ground support we’re putting in is per the budget.
We’ve had no surprises. The initial stopes that we’ve, we’ve drilled and blasted and mined now are sort of running between four and a half and eight and a half tons per meter of drilling. It’s what we planned. We’re getting great fragmentation. You can see that in the, the bottom left picture.
Our enabling infrastructure is on track. There’s there’s a $100,000,000 in that paste plant between the the contract we let and the owner’s cost. That’s Australia’s biggest paste plant and it’s been being built and commissioned in advance of requirements. Ventilation is now nearing completion and you can see that the top left picture there. That’s a $15,000,000 investment just in ventilation and primary ventilation and probably 18 months to two years of planning to have that in place today when we need it.
Our productivity underground for the jumbos, we’ve been touting that for some time. That continues at a pace even though we are now stoping, paste filling and doing a whole bunch of other activities underground. We continue to focus on the mine in terms of making it efficient. So we’ve stuck with our dual declines. We’re looking forward to getting some bigger stopes coming through in the back 2026 up to sort of 40,000 ton stopes and 80,000 within the next two years.
And we’ve already ramped that underground up to a run rate as of sort of today of about 600,000 tons per annum in sort of three point five months. The next two to three months, that’ll be closer to one. And at the end of q three, it’ll be about one and a half. So it shows there’s a real progression of that underground mine, it has to be because the open pit is finishing, and that’s where our focus is. Next slide, please.
This is something that Tony alluded to. Back in November, we really pivoted in low cost environment to focus on how do we pull spend out of what we’re to put out the door going forwards. And one of the biggest levers we pulled was cutting back development and revising our mine plan so that we dove down to the high the higher grade, thicker zones of of the ore body faster. What that meant was we took a lot of development out. We slowed the overall, development down and it put a little bit more pressure or it made us pivot to processing our ROM and our OSP stockpiles earlier.
We reduced our target in terms of what the common rate that we were going to produce from sort of six to 5.2. It makes more money and it certainly saves more money in terms of development. And we commenced trialing how we would best treat this OSP material. Now this OSP material is essentially clean or mixed with with with the Gabbro, which is the host rock, in anything between five and thirty plus percent. And for those that are not aware that Gaborow is very, very, I guess negative on terms of processing recovery.
It’s hungry in power and it’s hungry in reagents. In terms of, I guess, our peer companies that run DMS and DMS float circuits, they simply cannot process much over 5%, because of the, the actual SG of the GABRIO is very near the SG of the spodumene. So you literally you can’t, you have no selectivity. Demonstrated over the last few months is our ability to not only sort, which many others are doing and and and there is there is some benefits of ore sorting, but we’ve also demonstrated the ability of the plant to take direct OSP feed in levels of north of 20%. And the graph to the right there shows that we’re still making saleable grade concentrate at levels 15% to 20% Gabbro.
This is this is truly truly truly impressive, reflects the massive effort of the tops the team on-site and it reflects the the the flexibility of the plant to handle this type of feed. And it gives us another lever to pull in terms of what we do with the OSP. The OSP is a very much a finite issue. It’s very much an open pit mining problem to have. And if you ask any of our peers that that have open pit mines, they will tell you that.
We’re certainly not seeing that percentage of OSP coming from underground, in fact, the opposite. We continue to work with that OSP and we’ll do for the 2026. But I guess the messaging to all that are listening is is that we have a plan, we’ve got it under control and we’re making it work. And not only are we making it work, we’re making it work well. Think I’ll hand over to Graham at that point.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Next slide, please.
Graham Pettit, Interim CFO, Liontown Resources: Thanks, Adam, and good morning to everybody on the call. This slide outlines some of the key financial highlights for both the current quarter and also the year to date. Starting with cash, we generated positive cash flow from operating activities for the quarter of $23,000,000 which was particularly pleasing given the challenging pricing environment. This is the third consecutive positive cash flow from operating activities reported since the commencement of operations just under a year ago. Our closing cash balance remains strong at $156,000,000 and excludes the return of $25,000,000 used to cash back a guarantee facility that was mentioned in last quarter’s presentation.
These funds are now expected to be received during the next quarter. Quarter on quarter, our closing cash balance declined by $17,000,000 or approximately 10%. I’ll discuss the movements in the cash balance in a bit more detail on the next slide. Running through the quarterly financial stats, revenue was $96,000,000 which represents an 8% decrease quarter on quarter and reflects a decrease in average realized price offset by a small volume increase. The Q4 average realized price of $6.33 per dmt SIF, which was $75 lower than the previous quarter.
In $8 terms, the average realized price was $9.84 per dmt, which represents an 11% decrease Q on Q. The average concentrate grade shipped remained in line with the previous two quarters at 5.2%. Unit operating costs of $8.98 DMT sold FOB and all in sustaining costs of $12.27 DMT sold FOB were mainly impacted by an inventory charge reflective of the drawdown in stockpiles. As we had outlined in the Q3 quarterly presentation, we had expected to see an increase in unit operating costs in Q4 as we reintroduced ore sorting and drew down stockpiles. I won’t spend time on the year to date financial steps, but what I want to draw your attention to is the notes in the quarterly report discussing ROM ore stockpile valuations.
Through the preparation of our FY 2025 full year fin steps, we identified the requirement to adjust the carrying value of our ore inventories down to their net realizable value. The adjustment of between 75,000,000 and $85,000,000 is in accordance with our accounting policies and mainly relates to our OSP inventories. I just want to make it clear that this is a noncash accounting adjustment and is driven by the current low lithium price environment. The write down does not impact our reported unit operating costs, or AIC, and the production of OSP, as Adam mentioned, is mainly associated with the open pit mine, which is scheduled for completion in December 2025. Next slide, please.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Just before we go off this slide, if I can just reinforce a point that Graham has made. That $23,000,000 of net cash from operating activities is the highest figure we’ve received we’ve done so far. But that is on the backdrop of a price that has dropped $75 a tonne, our realized price. So to put that into context, it’s a better outcome at a lower price. And that reflects the business optimization work and our focus on cash.
Graham Pettit, Interim CFO, Liontown Resources: Excellent. Next slide, please. This slide has a cash flow waterfall that broadly shows in Chart four and the same information that is in the five gs cash flow statement that we released today. We’ve provided an additional split on investing activities to clarify the working capital benefit of drawing down on stockpiles. Starting at the left of the waterfall, we had a positive cash flow from operating activities of 23,000,000 we’ve outlined.
As Adam mentioned before, the underground mine commenced production stoping during April. So this is the first quarter where we have started to see some underground mining costs flow through the operating cash flows. Cash flows from investing activities was $49,000,000 for the quarter, and we’ve provided an indicative split based on the cost weights. Growth capital was estimated at $30,000,000 and mainly covers the initial tailing storage facility construction costs and underground infrastructure and development costs. As mentioned, underground operating costs started to flow through the operating activities.
However, given where the underground is at in its development and ramp up, it has not yet reached commercial production for accounting purposes and is not expected to do so until Q3 FY twenty twenty six. Sustaining capital mainly related to open pit deferred waste and minor capital projects. The open pit is planned to continue to focus on waste stripping throughout the next quarter before reaching the final major ore zone in Q2 FY ’twenty six. Cash flows from financing included the proceeds of the $15,000,000 loan gratefully received from the WA state governments under the lithium industry support program. The loan is interest free and repayable over two years following the end of the interest free period.
We have highlighted a cash AISC of $10.99 dollars per DMT sold. This was done to highlight that our reported AISC of $12.27 dollars per DMT sold for this quarter is being inflated by noncash inventory charges. And as a result, the actual cash unit cost that we realized for the quarter was lower. Finally, we ended the quarter with a strong $156,000,000 closing cash balance and 11,000 tonnes of concentrate on hand. Turning to the next slide, please.
This slide outlines our actual performance for H2 FY ’twenty five against the guided ranges. For context, we provided our H2 guidance three months after turning on the processing plants, and very few producers provide guidance during ramp up as we have. Running through the cost metrics, concentrate sold on an SC6 basis was 165,000 DMT, which was 3% below the bottom end of guidance, partially impacted by the lower concentrate production. Concentrate produced on an SC6 basis was 155,000 DMT, which was 9% below the bottom end of guidance. This was a result of lower OSP recoveries than initially contemplated when guidance was given, and Adam has covered off how we’ve been dealing with that.
Unit operating costs on an SC6 basis were $9.31 DMT, which was 9% over the top end of guidance. This was mainly a result of the lower production and high inventory charge resulting from a drawdown on inventories. Expenditure was $94,000,000 which is three percent below the bottom of guidance and partly reflects capital reductions and deferrals from the business optimization program. And finally, when taken together, AISC on an SE6 basis was $12.56 DMT, which was within the guidance range. Although there were a few misses to guidance, the outcome should be viewed in the context of a new facility being ramped up and a challenging pricing environment requiring operational adaptations.
And to that end, we are pleased with what’s been achieved. I’ll now hand back over to Tony.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Thanks, Graham. Just to set the scene, we’re now moving to FY ’twenty six and what we’re seeing with FY ’twenty six. As we’ve said for some time, it is a transition year and we’re ramping up the underground. So I’ll now hand over to Adam that will give you some color as to what we’re seeing in FY ’twenty six.
Adam Smiths, Chief Operating Officer, Liontown Resources: Next slide, please. Thanks, Tony. So I think I alluded to a little bit earlier, but I think the twenty sixth is very much a transition year. The big focus is on enabling infrastructure. A learning for me as a non mining engineer is how much infrastructure and how much pre planning needs to go into one of these underground mines.
And our team certainly who but many of them have been on board now nearly three years have certainly done that work and that’s why the infrastructure is coming on, as planned in this quarter. So that includes the ventilation, which should kick off in about a week’s time. The first big vent fans will be brought online. Our bigger stopes will kick in, in the back half of 2026 where we’re talking north of 40,000 tonnes per stope, and that will enable us to get that sort of, ore delivery out of underground that we need to support the processing plant. We’re looking at completing the open pit on schedule, in December year.
The better ore from that pit now comes out in October, November and December. That’s a project or that’s a contract that was let nearly three years basically, has finished almost within a month of the date that we awarded it. So it’s a pretty stellar achievement by Pete and his team, with the open pit. We’re still targeting our recovery of over 70 in Q3. People may ask given that we’re 57 for the quarter, how are we going to do that?
It is very much ore related and I’ve got a slide that talks to that. Clean ore equals better recovery and we’ve already demonstrated that in ’25. And all of our ore will be coming from underground as of Q3 in 2026, and we’re on track to achieve that. In terms of the processing plant, look, we think our availability is best in class, 96%, feed on, feed off availability is truly sensational. We’re restructuring the ROM pad currently.
The ROM pad initially was set up as an ore stockpile, which given the way the ore came out of the open pit, it is now being very much set up around feeding the crusher and reducing tramming distances. The processing plant had a lot of tech built into it when we started up, including an on stream analyzer from Medso. That technology has taken us a while to get it to work and it is now working. So we are now trending, lithium online. But we haven’t stopped there.
We’ve continued to spend money and deploy capital on things that make sense. So we’re just through the through the final stages now of an advanced control system on the mill called Manta, that enables us to control grind significantly better than just the standard PLC. We’ve also, just installed what we think is Australasia’s, first online particle analyzer using cameras in pipes that give us a particle size distribution, every twenty seconds. It’s pretty revolutionary technology. But we continue to push these types of projects through.
And you may have seen a recent video where we’re talking about a regrind mill that should be commissioned, in August, where we’re looking at regrinding a fraction of our tailings, again, focused on recovery. And we continue to refine how we process that OSP. OSP is a very finite issue as I mentioned, but we continue to focus on what proportion we sort, what proportion we feed and whether we blend or direct feed, to the mill. Next slide, please. I mentioned earlier, a tale of two halves.
’26 is very much a tale of two halves. Half one is very much focused on processing those stockpiles, completing the open pit and bidding in the underground. That’s half one. Half two is very much focused on ramping that up that underground and really cashing in on the benefits of that clean underground ore. And that’s why we’re so confident that we’re going to get that sort of 70% recovery, based on the work we’ve already done processing straight underground ore through the plant.
So 2026 is obviously ramping down that open pit production. So we finished in December. We still got about 400,000 tonnes of clean ore to come out of the pit. We’re continuing to focus on maintenance. We’ve just had a large maintenance shutdown in the plant.
That was not maintenance per se, but a lot of it was actually improvements to the plant to make it even better. And we continue to optimize that OSP strategy over the two quarters. In terms of Q3 and 2026, it’s all about scaling that up that underground. The underground is very much about scalability. We’ve got we built that scalability into it in terms of the dual group declines, the level development and even the equipment mobilization and the contract we put in place over two years ago with Bermkad is very much around gear or structured around ramping up the underground.
And we continue to focus on availability. Put that in perspective, the underground is sort of producing say 70,000 to 100,000 tonnes a month currently, and 36 stopes in the first half. It ramping will to 100,000 to 170,000 tonnes per month and about 48 stopes in the second half. And then that ramps up to two thirty tonnes a month and sort of 80 to 90 stopes annually in 2027. So you can see there’s a plan.
It’s the same plan that we’ve had in place for a while and we continue to execute that plan. And we continue to be ahead of the plan. I think that’s a a key learning or a key, a key driver of how we’ve always gone about business at at Linetown is to be ahead of the curve and ahead of where we need to be. And that’s where we are or we believe we are with the underground in terms of the infrastructure, the people, the systems and just the general ramp up that we’re pushing. Thanks,
Tony Otteviano, Managing Director and CEO, Liontown Resources: Adam. We’ll turn to the next slide. Adam’s got one more slide to do, but I do want to say I want to thank Adam. This will be his last quarterly with us. And I’m deeply indebted to Adam and the and his entire commitment to the organization.
And you can see he loves the technical stuff. He is the engineer’s engineer. And I can say that because I am one. So I wanna thank you, Adam, for your work you’ve done and the way you’ve set us up. Okay.
So we move into FY ’26. There’s a lot of stuff that we’ve already discovered, but there are two points that I wanna draw out here. Firstly, the first half and the continuous focus on the OSB and get those stockpiles out of the way so we can set ourselves up for the really prime and good quality underground materials so that we can maximize our recoveries. The second bit is the Q1 scheduled shutdowns for the mill and the dry plant. Now that’s planned.
You know, we’ve been operating the mill for over a year now, and we needed to go in and do the scheduled maintenance. But if you look at the actual, parameters for FY ’twenty six and the guidance, I mean, the production, if you take the midpoint, it’s a 39% increase from this year. So it is a significant increase. And then the costs a lot of that costs associated with drawing down stockpiles, but again, the focus on cash maximization. Okay.
And there’s no change to our recovery target and our underground planned production. If we move to the next slide, please. And we’ll ask Adam to finish off on this one. Yes. So I guess one
Adam Smiths, Chief Operating Officer, Liontown Resources: of the key mine takeaways for 2026, it’s really a transitionary year, and that’s to be low cost and scalable by 2027. So the plant or the underground is designed for scale. We’ve de risked or we are de risking progressively the underground and we’ve been doing that since day one. And the target of the underground is always a lower cost per tonne. And what do I mean by design for scale?
We put dual declines in from day one. We know we’ve got big stopes and they’re coming. They’re coming in half two twenty six where crack the 40,000 mark and up to 80,000 in the next two years. So that’s 80,000 tonnes from a single stope versus the smaller stopes we’re hitting now, which are around the 10,000 tonne mark. We also hit the bulk levels where we’ve got over 125,000 kilotons of material per vertical meter.
And you can see the annualized production run rate. So we’re already at about 0.5 today, point six actually by the end of this month. We’re we’re gonna crack a million tons in the next, in the next couple of months. And then at the March, about one and a half million tons. And that comes with, a combination of equipment mobilization, systems and actually a lot of prior planning and a lot of, development that we’ve been doing over the last few years to drive that type of ramp.
It doesn’t come just because you throw a few more bits of equipment down underground. It becomes because you’ve actually got a plan for it. You can’t and you can see this in other companies’ results over the last sort of twelve months. If you don’t have the levels available, if you don’t have the space available on the ground, you can’t physically ramp that underground up. And we’ve planned for that from day one.
In terms of the derisking, I think a lot of the derisking has has focused heavily on infrastructure. It’s focused heavily on people, and where we’ve where we’ve seen gaps, we’ve we’ve bolstered the team, and that’s happened in in the last quarter as well. So we’re pushing very hard, not only on the physicals, but also the people and systems. And what does all that give us? It gives us that lower cost per tonne.
So ’26 is very much about development. It’s a lot more development going in underground. It’s about 12,000 meters going in eight and a half, sorry, and going in in ’26, versus sort of seven in the last twelve months. And that’s very much focused on staying ahead of the curve. And then we’re obviously ready for that expansion 2.8 to four.
We haven’t lost sight of that. It’s very much price dependent. And look, where the price goes is where the price goes. But certainly, the mine’s always been designed to expand, and we’ve just got the ability to turn that on and off. I don’t think there’s much more to say on that.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Thank you. Thank you. If we move to the next slide, please, and this is where we sort of wrap up. The continuing relentless focus on maximizing value. If we go to the next slide, please.
So we promised the market that we would deliver on our cost out targets, and we delivered 112 compared to a target of 100,000,000 So the split is 71, which is recurring and then 41 as a result of deferring. And a lot of the deferral was due to the Northwest Flats being pushed out and all the development costs associated with Northwest Flats. But in ’26, the focus continues. We’ve got, our the market is what it is. And if we look at where we will tackle this next horizon of cost optimization and business optimization, it will be around better sourcing of our product and our consumables, buy better, improve the outcomes of our top 10 contracts, a lot of them done during the peak market and removing waste and duplication in our processes and activities.
Okay. So we’ve got our program underway at the moment, which will continue through 2026 and deliver outcomes. If we go to the next one, please. Okay. Now I’ll turn over to, Grant Donald, who will take us through the next two slides.
Thank you, Grant.
Grant Donald, Chief Commercial Officer, Liontown Resources: Thanks, Tony. Look, we thought it was worth emphasizing the extremely attractive debt package that we secured from customers. This is covenant light and it’s a real differentiator for us versus bank debt or project finance debt. If we can start with the forward facility, the AUD 300,000,000 debt facility had no interest payments until the offtake started, which means the accumulated unaudited balances at $336,000,000 as at the June 2025. The term is five years from the start of the offtake, which was agreed at Ford’s request to be one July twenty twenty five, meaning the debt matures in June 2030.
60% of the principal is amortized over the five year term with a 40% loan repayment at maturity. The interest rate is 1.5% above BBSW, which is equivalent of about 5.6% today. And the first interest and principal repayment is due at the September 2025, now that the offtake has commenced. Moving to the LG Energy Solution convertible note. This is denominated in U.
S. Dollars to match our revenue line. Again, a five year term, it’s AUD $250,000,000 equivalent to around $370,000,000 at the time of conversion. The share price conversion is AUD 1.8, and the interest rate on this is so far flat, which is currently around 4.3. This also has biannual interest, which is capitalized for the first two years, after which Linetown can pay in cash or equity until maturity of the facility in July 2029.
Deciding to use customer backed financing to build Kathleen Valley has given us really good alignment with customers who also want to secure the product for the long term supply chains they’re building. We believe this is a competitive advantage versus where we would have been if we’d taken a traditional debt finance from project financiers. Next slide, please. We’ll finish on the market. In the short term, we are beginning to see signs of a policy shift to halt the irrational competition or involution as its term.
This shift was signaled by Premier Li Keqiang at a state council meeting in mid July. And this year, it specifically referenced as it relates to the EV sector, emphasizing a shift towards quality and innovation as opposed to price cutting. Local authorities have also been directed to discourage overinvestment in redundant projects, and this is filtered through to a number of audits or restrictions placed on lithium producers in China, which is impacting the supply side. You can see the very tangible impact of these stories on the futures exchange in China on the lifetime chart. On the demand side, the company continues to see robust outlook demand for high quality spodumene concentrate.
In the first six months of 2025, lithium demand has continued its double digit growth rates, driven by strong electric vehicle sales and battery energy storage systems. Global EV sales increased by 28%. Now to put that in context, that’s the equivalent of 2,000,000 more EVs sold, taking the total to 9,000,000 sales in the first half. And the silent sleeper here is really the battery energy storage systems where installations have increased by 54% year on year. S is set to be a very material driver of demand on a go forward basis.
And we tried to show this in the chart on the right hand side to to show you that one out of every four incremental units of lithium demand over the next five years is going to battery energy storage. So in summary, our view is that the current lithium price environment really reflects an evolving supply demand dynamic. And as we anticipate a return to more normalized conditions as demand continues its robust long term growth trajectory. Thanks, Tony.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Thanks, Grant. If I can go to the final slide before we open up for Q and A. Look, just to summarize our position. As the CEO, I’m very proud of what we’ve been able to achieve since we started production in July. And we’ve had to battle that ramp up against a very, very tough low price environment.
And I think the team has done an outstanding job in getting us there. The focus has been where the focus should be, and that is to perform well to and operate as best we can with preserving cash. And we’ve done that with a cash balance of $156,000,000 at the June. We know what we have got in front of us in FY 2026. Adam’s already articulated how we planned and we’re well positioned to deliver on those outcomes.
And finally, the relentless focus on maximizing value should be a theme regardless of the market, but it even more in sharp relief as we enter in this period of uncertainty. So with that, I open the line for Q and A. Thank you.
Conference Moderator: Thanks, Tony. Our first question comes from Adam Baker from Macquarie.
Adam Baker, Analyst, Macquarie: Tony, thanks for the call. Thanks. Got name wrong there. Just very interested in the slide on Page 14 with the underground ramp up with your run rates getting to that $3.75 Kt by the three gs FY 2026. And then you’ve got your progressive ramp up to the 2,800,000 tonnes by the 4Q FY 2027.
So just wondering what sort of drop off we see in the milling rates in that 2027 as you kind of dovetailing that ramp up in the underground and that’s offset obviously by the reduction in stockpiles and the remaining open pit material? And what are kind of percentages reduction in throughput of blank capacity that would be?
Adam Smiths, Chief Operating Officer, Liontown Resources: I think there is no drop off, no ramp. It’s we’re trying to keep it steady state is how we’re managing the stockpiles and the transition.
Tony Otteviano, Managing Director and CEO, Liontown Resources: So the mill rate will decrease the underground production? Correct.
Adam Baker, Analyst, Macquarie: Oh, okay. It just it it it appears just on the y axis, it’s it’s dropping off a little bit, but, maybe maybe that’s just, my
: my Yeah. And then
Adam Smiths, Chief Operating Officer, Liontown Resources: Yes, very much a yes. Annualized rate, though,
Tony Otteviano, Managing Director and CEO, Liontown Resources: is still pretty stylized.
Adam Smiths, Chief Operating Officer, Liontown Resources: But Pretty the annualized rate for ’27 is 2.8, Adam. Yes.
Adam Baker, Analyst, Macquarie: Thank you. And then just secondly on the offtake with Ford, just saw that there was an agreement to resell 150 kt of spodumene. Do you think there’ll be any future agreement to resell more spodumene offtake? And secondly, if that did occur, would there be a change in the timings of the P and L repayments?
: Yes.
Grant Donald, Chief Commercial Officer, Liontown Resources: Look, thanks, Adam. I guess reality is the EV landscape has changed materially over the last few years. And, you know, we saw an opportunity for us to to place these tons on behalf of Ford with another customer who wanted the product. Ultimately, you know, that that is ongoing business as usual as far as we are concerned. If we see an opportunity to place product with a different customer for more value and it works for everyone, then those are opportunities we would pursue.
I don’t think that necessarily is any portent of the future. I think that’s just what we’ve done in the short term given the current demand position that Ford has for its own internal consumption.
Conference Moderator: The next question is from Hugo Nikolaki from Goldman Sachs.
Hugo Nikolaki, Analyst, Goldman Sachs: Tony and team. Thanks for the update. Congrats on your first year of production. First one from me. Tony, you’ve always focused on giving volume and cost on an SC6 basis.
Noting your FY 2026 guidance today is on a 5.2% basis on production and costs. Why the change?
Tony Otteviano, Managing Director and CEO, Liontown Resources: Well, we’ve been consistent with the rest of our competitors. We found that it’s been a challenge to continually revert to SC6. Really frankly, if the product we’re producing is 5.2, that’s the cost structure that it’s based on. So it’s basically falling into line with the rest of the market.
Hugo Nikolaki, Analyst, Goldman Sachs: Yes. Got it. So we’ve kind of moved to the same as everyone else does. That makes sense. On the cost savings piece, you’ve touched on a little bit already.
Can you just confirm whether you’ve now changed rosters and reagents already and if that’s in the GBP 71,000,000 of recurring savings? And then maybe just elaborate a bit more on what magnitude of cost savings you expect to get through FY ’twenty six from buying and sourcing better and removing duplication?
Tony Otteviano, Managing Director and CEO, Liontown Resources: Yes. So the rosters remain unchanged. So it’s not included in that figure. The reagents, we still have the reagent that we’ve been using. We’ve been playing around with consumption rates.
So there is still an opportunity to look at an alternative reagent, but we need to do a bit more test work, and that’s planned for FY ’26. In terms of a target for FY twenty six, we haven’t put anything out there because we’re still working it through to establish the size of the price. So until that work is done, Hugo, I’m not prepared to put a target out.
Conference Moderator: The next question is from Lyndon Fagan from JPMorgan. Please go ahead.
: Thanks very much for the call. Good day, Tony. Just looking at your cost guidance, I guess if I take the midpoint multiplied by the midpoint of production, we’ve got site cost just under $400,000,000 I’m wondering if that’s kind of setting the benchmark going forward to operate the site. Obviously, underground ramps up, open pit ramps off. I mean, maybe you could give us a bit more of a sense of what the $1 million looks like as a pure underground.
Just trying to get a handle on this number to try and forecast forward.
Graham Pettit, Interim CFO, Liontown Resources: The $400,000,000 is a fair representation of the gross costs going forward. Underground first
: going
Conference Moderator: So
: Got it. Okay. That’s helpful. Thanks. Yeah.
Look. That’s pretty much all I had. Thanks, guys.
Tony Otteviano, Managing Director and CEO, Liontown Resources: You’re gonna change your writing on us, Linden? Next question, thanks.
Conference Moderator: The next question is from Kate McCutcheon from Citi. Please go ahead.
Kate McCutcheon, Analyst, Citi: Hi, morning, Tony and team. So the next two quarters, you’ve got the OSP material going through. In your all in sustaining cost, what is that stockpile adjustment component, please?
Tony Otteviano, Managing Director and CEO, Liontown Resources: So just so I’m clear, Kate, and good morning. Are we talking about the adjustment to the carrying value of the stockpile? Or we’re talking about how much of the unit cost is the inventory piece?
Kate McCutcheon, Analyst, Citi: The latter. So in that dollar per tonne asset, what amount is the stockpile adjustment? Yes.
Graham Pettit, Interim CFO, Liontown Resources: Got it. So, Kate, we estimate it between $40 and $50 per tonne on an AIC basis. Cool.
Kate McCutcheon, Analyst, Citi: Thank you. And then in Slide 16, you’ve told us that you expect FOB cost to come down 20% to 25% in 2027. So that implies a little over $800 a ton Aussie, which is kind of similar to Linden’s question. Is that level of cost out? Also, how we should think about all in sustaining costs and would it be unfair to assume that’s a level going forward?
Graham Pettit, Interim CFO, Liontown Resources: So a lot of the drop in FY 2027 is because we start getting efficiencies. A lot of the mining costs underground are fixed. And as we ramp up volumes, we wash the fixed costs more cleanly over over more tons. From a sort of go forward perspective, you know, think, I mean, as you can see in the the middle chart there, we do have high capital development costs at the moment, and we expect those to moderate over time.
Tony Otteviano, Managing Director and CEO, Liontown Resources: So as we’ve previously just to build on what Graham said, Kate, as we move into the thicker bulk zones of the ore body, which we anticipate doing in the back end of FY 2026 and into 2027, we will definitely get economies of scale. We will be able to wash over the fixed costs of the contract mining over more tonnes as we get into those larger stopes. Yes. Sustaining on a gross basis will drop over time. Yes.
Conference Moderator: The next question is from Glen Lawcock from Barron Joey. Go ahead.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Glen did you notice the cash thing for you?
Tony Otteviano, Managing Director and CEO, Liontown Resources0: Sorry, I missed that Tony, you broke up.
Tony Otteviano, Managing Director and CEO, Liontown Resources: I just said did you notice we did that cash flow cash calculation for you in our cash flow guidance? Thank you.
Tony Otteviano, Managing Director and CEO, Liontown Resources0: Much appreciated. Good to see you appreciate my skid math Tony.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Yes, we did.
Tony Otteviano, Managing Director and CEO, Liontown Resources0: Which everyone is talking about now, just not calling it skid mass. But to get back to Lyndon and Kate’s questions, it’s $400,000,000 spend. Your inventory movement actually sits in your cost of production as per your prior guidance, I assume. So the $400,000,000 given you’ve got or you had $100,000,000 of inventory, your $40 to $50 a tonne inventory movement to Kate’s question, didn’t suggest $20,000,000 Is that right? I would have thought the $400,000,000 you should be able to pull quite a bit of inventory down with near over $26 So what is that dollar millions figure that you expect will be inventory movement?
Graham Pettit, Interim CFO, Liontown Resources: I don’t have that number with me, Glyn, but the the estimate of $40 to $50 is over a higher, sort of sales base, and it’s, you know, we only bet we only we consume most of those, inventory units in the first half. But, yes, apologies that I don’t have the gross number
Tony Otteviano, Managing Director and CEO, Liontown Resources: to The way to look at it, Glyn, is the inventory drawdown will be an exercise in two halves. We’ll have a lot of it in this first half of FY 2026. And as you can see from our results of FY 2025, we did a drawdown, in FY 2025. So as we ramp up the underground, there will be much more pulling coming out of that inventory. But then in the back half of FY ’26, it will be predominantly fed from the underground.
Graham Pettit, Interim CFO, Liontown Resources: And, the the other thing is that we do build inventory over time. So that 40 is a net inventory charge that rolls through. So you don’t see the full whack of the drawdown.
Tony Otteviano, Managing Director and CEO, Liontown Resources0: Yes. I guess I’m just trying to if I run a very if I run a very simple model of the midpoints of all your guidance, including CapEx, etcetera, plus all the interest payments, principal payments, you’re going to spend over AUD $660,000,000 this year before inventory adjustment. That means your breakeven is about US10.50 dollars a tonne on an SC6 equivalent basis, just based on your guidance, just running the skid math.
Tony Otteviano, Managing Director and CEO, Liontown Resources: So I
Tony Otteviano, Managing Director and CEO, Liontown Resources0: guess, haven’t had chance to do that.
Tony Otteviano, Managing Director and CEO, Liontown Resources: So assume you’re right. So we’re yeah. So what’s the question?
Tony Otteviano, Managing Director and CEO, Liontown Resources0: So I guess, you know, that would at today’s price of $800 a tonne, cash burn of $100 got $156 so that’s fine. So I guess just like what are you doing? You’ve got your extra $100,000,000 of debt you’re allowed to get. Maybe you can get forward to defer. Just curious what are you doing to make sure you’ve got additional liquidity?
Tony Otteviano, Managing Director and CEO, Liontown Resources: Okay. So that’s the question. Okay. Well, look, there’s a couple of things, we’re going to focus on. Well, clearly, we’re going to focus more on cost optimization, and we’re going to pull that lever.
The second thing is, you know, we’ve got a strong balance to start with, dollars 156,000,000. Thirdly, you know, we’ve got a track record well, there’s a bit of a price improvement, but we’ve also got a track record of finding funding solutions with our customers and other parties. We will continue to look at those funding options as we progress forward. As simple as that. But it depends really on where the market goes.
Grant Donald, Chief Commercial Officer, Liontown Resources: Yeah. And and Glenn, just to add to that, I mean, we we have improved the lever on prepayments like a lot of our peers have done. We you know, as we’ve just demonstrated in ’27 and beyond, we have a significant amount more volume to place, you know, that could be spot, could be long term offtake. So we still have quite a lot of options ahead of us.
Conference Moderator: The next question is from Stuart Howe at Bell Potter Securities. Please go ahead.
Tony Otteviano, Managing Director and CEO, Liontown Resources1: Hi, Tony and team. Just a question and apologies if this is being asked. But the guidance balance for the first half versus second half, have you got a rough percentage split across those and obviously taking into account the shutdown in Q1? And assume also costs will be correspondingly conversely down to that.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Sorry, Stewie, you’re sort of a bit muffled. But can you tell us you want to know what the cost split is between the first and second half of FY ’twenty six?
Tony Otteviano, Managing Director and CEO, Liontown Resources1: Sorry, no. The production balance between first half and second half of ’twenty six.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Right. Well, it will be more back ended. So I don’t have that figure off, Mick.
Graham Pettit, Interim CFO, Liontown Resources: We’ve we’ve got about a 170 odd thousand in the the first half and then 250 odd in the back. Yep.
Tony Otteviano, Managing Director and CEO, Liontown Resources2: We need the range of
Tony Otteviano, Managing Director and CEO, Liontown Resources: items. Sorry. Sure.
Tony Otteviano, Managing Director and CEO, Liontown Resources1: And then just on plant flexibility, you obviously pointed to the ability to sort them your sorting material and process that. And well, that’s great for, obviously, this coming fiscal year. But once you’re into underground ore only, those flexibility benefits probably fall away? Or are there other ways we can think about how you might be able to use that going forward from an underground only perspective?
Tony Otteviano, Managing Director and CEO, Liontown Resources: Well, I think the point that we were trying to make there, Stu, is that the ore sorting product material is essentially an open pit phenomenon, where in open pit, about 30% of what you mine will typically report to this OSB category. As we go underground, by definition, we’ll be far more, surgical in our product extraction and we won’t have anywhere near this amount of OSP to deal with. So we’ll just blend whatever OSP material we get from the underground will just form part of the blend going forward.
Conference Moderator: The next question is from Reggie Spencer from Canaccord. Please go ahead.
Tony Otteviano, Managing Director and CEO, Liontown Resources2: Hi, Reggie. Hi, Tony. Grant and team, thanks very much. Forgive me if you’ve covered off on this, but I just wanted to dive into recoveries in the OSP between now and Q3 FY twenty twenty six when you expect recoveries to start to pick up. So what you delivered in the June Q is should that be indicative of expectations on recoveries, in terms of that blend of OSB?
Adam Smiths, Chief Operating Officer, Liontown Resources: Yes, good question, Reg. I think we’re targeting around 60,000,000 to 65,000,000 over the half one as we progressively put more clean ore in the back of the half. But certainly, Q1 will sort of 55 to 60 is a real number to use. And then ’26 will be slightly better. And then likewise, ’3 and q four.
So it’s about it’s about the focus is to get a lot of that OSP done and dusted this calendar year. Yeah. And that’s by a combination of all sorting. Not just straight feed. That’s why we’re
Tony Otteviano, Managing Director and CEO, Liontown Resources2: That’s great. Thanks very much, Adam and Tanner. Super helpful. I’ll pass it on.
Conference Moderator: The next question comes from Andrew Harrington from Petro Capital. Please go ahead.
: Good morning, gents. Well done, Tony and team. My question is more about what’s happening with logistics. And as you’re ramping up, what are your challenges? Or how smoothly or otherwise are things going with ground transport, the port, shipping?
What’s happening with those costs? If you can provide some color on that, that’d be useful.
Grant Donald, Chief Commercial Officer, Liontown Resources: Yeah. No problem. Look, logistics side, you know, we we we made a very deliberate decision to use Cube. You know, they’re very established operators, they’re very professional. We’re using quad road trains.
So four trailers, it’s taking over a 146 tons per per truck road train. And, you know, we’re cycling through those. They do a figure of eight loop between my magnet and sites and then my magnet and Geraldton. So everyone get sleep in their own bed. The logistics so far have been extremely smooth and efficient.
Of course, you know, Geraldton is known for having some swells and weather activity, but, you know, that’s all just part of going out Geraldton. So, you know, on occasion, there’s a bit of a rush at the end of the year, but but no no problem so far.
Adam Smiths, Chief Operating Officer, Liontown Resources: Yeah. And I think to to add to that, I think part of that contract with Cube, which is not only the logistics, I guess, strength, but also the contract included an established shared and out load facility at the port, which is fairly unique, a previous facility that was built by others, but massive difference to just rolling up as a new customer in the port. So you already had an established out load facility and 40,000 to 50,000 tonnes of storage capacity within the port itself.
: Right. Very good. And if I may, a second question. Can you provide some color on movements in terms of sentiment in China and how you view the market? What’s relatively small changes in policy seem to have outsized impacts on sentiment at the moment?
If you could comment on that, it’d be useful as well. Thank you.
Grant Donald, Chief Commercial Officer, Liontown Resources: Yes. Look, I mean, to me, what that basically indicates is that the market is very positioned towards the short end things. And so there is, you know, quite considerable short positions that are built up on the GFX. I think just as just as some of those stories start to come through around supply curtailment that that pushed some of those short positions to unwind. But that unwind has actually been taking place a little bit before some of these news flows came out on the basis, presumably, that people felt the market was at the bottom.
But, Luke, I mean, it’s always difficult to tell fundamentally on supply demand. You know, we entered the year with around a 100,000 tons of oversupply if you look at the numbers. There’s always different views on projects coming in, but the reality is, know, you with the 28% growth we just talked about, the best growth, you know, we’ve seen over a 100,000 tons of new demand just in the six months gone. So, you know, we’re probably entering that point now where some of these challenges of getting new products ramped up, new projects ramped up is starting to translate into physical tightness. And certainly, what I see from customers in terms of inbound inquiries and
Tony Otteviano, Managing Director and CEO, Liontown Resources: a lot
Grant Donald, Chief Commercial Officer, Liontown Resources: of people looking for physical product because you can’t put paper in a battery.
Conference Moderator: Thank you. That’s all the questions we have time for today. Please reach out to the Liontown team if you have any follow-up questions. We thank you all for your time and have a great day. You may now log out.
Tony Otteviano, Managing Director and CEO, Liontown Resources: Thank you very much.
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