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Australian lithium miner Liontown Resources (ASX: LTR) reported a significant increase in its half-year loss on Friday, citing elevated costs as it approaches the commencement of production at its flagship Kathleen Valley project, coupled with heightened investment activities.
The company affirmed that the Kathleen Valley project remains on schedule to initiate production by mid-2024, adhering to its budget of AU$951 million ($624.1 million). However, in January, Liontown hinted at the possibility of delaying the planned project ramp-up due to the downturn in lithium prices.
Over the past year, lithium prices have plummeted by approximately 70%, attributed to lower-than-anticipated demand from electric vehicle battery manufacturers. Nonetheless, there has been a recent stabilization in prices.
Key financial metrics
Liontown's net loss after tax widened to AU$31 million for the six months ending December 31, a substantial increase from AU$6.9 million reported during the same period the previous year.
In a similar vein, Liontown's industry counterpart Pilbara Minerals (ASX:PLS) also recorded a sharp decline in first-half profit and revised its capital expenditure forecast downwards in response to lackluster prices.
In October, Liontown found itself the subject of a failed takeover bid by Albemarle (ALB.N). Earlier this week, the company took measures to bolster its debt facility to AU$363 million, aimed at supporting the ramp-up of the Kathleen Valley project.
Brad Smoling, managing director at Smoling Stockbroking, expressed caution regarding Liontown's stock, stating, "It's a stock I am happy to just observe at this stage and not invest in."
LTR shares closed 8.42% lower at AUD 1.25 apiece on 15 March 2024.
