Lithium miner Liontown Resources reins in Kathleen Valley tonnes amid savings drive

Liontown Resources is reining in production plans just three months after delivering its maiden load of lithium as it hunkers down to preserve cash amid a depressed market for the key battery metal that shows no sign of a recovery.

The Gina Rinehart-backed miner told investors on Monday that it was “resetting the baseline” for its flagship Kathleen Valley mine in the northern Goldfields as it chases higher margins at reduced costs while lithium prices remain in the doldrums.

That includes a revised mine plan to deliver a annual production rate of 2.8 million tonnes from the end of the 2026/27 financial year — down from an initial ramp up target of 3mtpa.

It will also look to generate savings of $100 million.

The weak market for lithium has already laid waste to other players who could not survive the prolonged downturn and there had been rumours Liontown could be forced to place Kathleen Valley on care and maintenance just months after it started production.

But managing director Tony Ottaviano said the revised mine plan would leverage the quality of the $950m project.

“When market conditions change, companies need to quickly adapt to meet the market,” Mr Ottaviano said.

“Through the business optimisation work done by our team, the revised mine plan and guidance demonstrates our responsiveness to the low-price environment.

“Our decision to mine underground affords Liontown the flexibility to target high margin areas of our tier 1 resource and scale our operations to meet the market, including preserving the ability to pursue expansion when the market recovers.”

Liontown is forecasting unit costs of between $775 and $855 for each tonne of 6 per cent spodumene concentrate. Current spot prices are hovering at about $US800/t ($1215/t)

The Tim Goyder-chaired miner last month reported cash outflows of about $230 million during the September quarter — about $30m more than analysts expected.

By the end of September, the company had $263m left in the bank, but it was yet to count the revenue from its first batch of sales.

Liontown also axed about a third of its white-collar staff, equating to some 30 jobs, in early October.

Just days prior to that job cull revelation the company waved goodbye to its maiden shipment of spodumene concentrate produced at Kathleen Valley.

The vessel contained 11,855 wet metric tonnes of the battery ingredient and departed from Geraldton Port.