Liontown Resources (ASX:LTR) used its December quarter results call to outline what Managing Director and CEO Tony Ottaviano described as an “inflection point” for the business, marked by the completion of open-pit mining at Kathleen Valley and a shift to scaling underground production. The company said the open pit finished on schedule and that Kathleen Valley is now “Australia’s first and only underground lithium mine,” with focus now on ramping underground ore supply and improving recoveries as the mill feed transitions.
Underground ramp-up and plant transition
Ottaviano said underground ore increased 37% quarter-over-quarter, while the company added equipment and opened new mining fronts. Chief Operating Officer Ryan Hair said the underground operation delivered just under a 1.25 million tonne per annum run rate in the quarter, after reaching a 1.0 million tonne per annum run rate in September, and remains positioned to hit a 1.5 million tonne per annum run rate by March.
On processing, management said the plant operated with high availability and improved recovery to 63% from 59% in the prior quarter. Hair attributed the increase to feed sequencing decisions during the open pit-to-underground transition and ongoing circuit optimization. The feed mix moved to 45% underground in Q2 from 35% in Q1. Hair said open pit ore is expected to remain roughly 50% of feed in Q3 before transitioning predominantly to underground ore during Q4, supporting a recovery target of 70% by the end of Q3.
Production, sales, pricing, and revenue
Ottaviano said spodumene concentrate production totaled 105,000 tonnes, up 21% quarter-over-quarter, with sales of 112,000 tonnes, up 45%, as the company cleared inventory and increased its shipping run rate. The company reported a realized price of AUD 1,365 per tonne (stated as about $900 per tonne on an SC6 equivalent basis), up 28% from the prior quarter.
Revenue was AUD 130 million, up 91% and described by management as the strongest quarter since operations began. Ottaviano noted the company’s standard quotation period (QP) methodology embeds price upside that is expected to be realized in the third quarter.
New CFO Greg Jason, in his first quarterly presentation, said the increase in revenue was driven roughly half by higher shipped volumes and half by higher realized price, with FX providing only a negligible positive impact. Jason reiterated that Liontown’s offtake agreements reference a portfolio of spodumene, hydroxide, and carbonate indices with both backward- and forward-looking quotation periods. He said the lagging QPs can delay realized price increases, while forward-looking QPs can be favorable when prices rise, and that uplifts between provisional and final pricing were already starting to appear in Q3.
Costs, cash flow, and balance sheet updates
Management said unit operating costs improved 17% and all-in sustaining costs improved 22% during the quarter. Jason reported unit operating costs of 910 AUD per tonne sold, within FY2026 guidance of 855–1,045 AUD per tonne. He said the decline was driven by:
- A very low strip ratio in the final open pit quarter, lowering open pit ore unit costs;
- Improved recovery as underground mining increased;
- Less OSP ore processed; and
- Economies of scale as the operation ramps up.
On cash flow, Jason highlighted “effectively break-even operating cash flow” for the quarter while underground mining ramped and the plant feed transitioned. Cash receipts were AUD 128 million, broadly aligned with reported revenue. Cash costs rose to AUD 122 million, which he attributed to the ramp-up in underground mining activity, higher ocean freight, selling costs, and royalties associated with higher sales volumes and pricing.
Growth capital was AUD 22 million, predominantly for underground development, consistent with the prior quarter. Sustaining capital fell materially, which Jason linked to open pit activities ending and fewer projects in the period. He also noted that underground capital development is being treated as growth capital until commercial production is declared, at which point it would be classified as sustaining capital and incorporated into all-in sustaining cost calculations.
The company ended the quarter with AUD 390 million in cash and 48,000 tonnes of saleable concentrate. Ottaviano said the cash position provides “runway and future optionality.”
Jason also discussed a balance sheet change tied to LGES convertible notes. He said LGES issued notice to convert 100% of its notes into equity, which management expects will reduce gross debt on a pro forma basis from about AUD 760 million to about AUD 360 million. Jason said net debt would reduce from about AUD 370 million to net cash of about AUD 30 million on a pro forma basis. He added that accounting standards require fair valuing the option component at December 25 and that the company expects a non-cash fair value charge of approximately AUD 105 million in the first-half P&L, driven primarily by Liontown’s share price increase over the half year. In response to a written question, Jason said capitalized interest also converts into equity rather than being repaid in cash.
Market commentary and growth planning
Chief Commercial Officer Grant Donald said calendar year 2025 saw global EV sales reach over 20.7 million units, up 20% year-over-year, while battery energy storage systems (BESS) grew 51%. Donald said global lithium-ion battery demand rose to almost 1.6 TWh, nearly 30% higher than the prior year. He also said the market began to show signs of a supply-demand deficit in the last quarter, contributing to price movement that continued into January, with expectations of continued deficits in 2026 likely to support prices.
On commercial strategy, Donald said Liontown deliberately retains 10% to 20% of its sales book for spot exposure and intends to continue running auctions through 2026 to support price transparency. He said the company does not expect to issue standalone ASX releases for every auction, but each transaction would be reported to price reporting agencies to feed into market assessments.
Ottaviano said the company has started a study refresh of the 4 million tonne expansion case from its original definitive feasibility study, emphasizing it is not committing capital until study outcomes, sustained market improvement, and board approval align. He indicated the study work has just begun and said the company would not expect to announce specifics until the end of the financial year and into the new financial year. In Q&A, Ottaviano and Hair said the approach is expected to be more incremental debottlenecking than a “big bang” expansion, with the potential to access ore via the bottom of the completed pit providing additional optionality. Hair noted the open pit is about 150 meters deep, which can reduce distance to ore and improve access options.
Ottaviano said, if an expansion were approved, underground development would likely be the rate-determining step, estimating an 18- to 20-month program from final investment decision to reach full expanded throughput, with smaller increments along the way. He also said the board would need confidence that pricing improvements are sustained—suggesting it could require six to eight months of consistent improvement rather than a short-term move.
Safety, ESG, and other items
Hair said the company’s Total Recordable Injury Frequency Rate increased due to a higher number of manual handling injuries across contractor work groups, and Liontown has implemented targeted actions to strengthen field leadership and contractor oversight. He also said the hybrid power station delivered 85% renewable penetration during the quarter, and the company supported the completion of its first apprenticeship by a Tjiwarl community member at site.
In response to a written question, Donald said Liontown has been selling tantalum byproduct on spot and “making money from that,” while keeping focus on maximizing lithium recovery during the ramp-up. Ottaviano also reiterated that while the company’s primary growth focus is organic development of Kathleen Valley, it will continue to review inorganic opportunities. He added that Liontown wants to build understanding and capability in both hard rock and brines, describing the strategic focus as “dual” in terms of skill sets.
About Liontown Resources (ASX:LTR)
Liontown Resources Limited engages in the exploration, evaluation, and development of mineral properties in Australia. The company explores for lithium, gold, vanadium, copper, and nickel deposits, as well as platinum group elements. Its flagship property is the Kathleen Valley lithium project located in Perth, Western Australia. The company was incorporated in 2006 and is headquartered in West Perth, Australia.
