Liontown Resources has decided to postpone its expansion plans for the Kathleen Valley lithium project in response to the ongoing decline in lithium prices, which has led to a reevaluation by investors.
The company’s shares on the ASX experienced a significant drop, falling from $1.19 per share at the end of the week to $0.90 on Monday morning, mirroring the broader downturn in battery metals.
The setback came after news emerged that a previously secured $760 million loan for the Kathleen Valley project had been withdrawn. Liontown attributed this development to the recent downward revisions in the independent forecasts for spodumene prices, which formed the basis for lenders’ credit approvals.
Liontown is now in discussions with lenders to renegotiate a scaled-down debt facility. The company has received indications from members of the lending syndicate that they remain committed to supporting the project.
In light of the challenging market conditions, Liontown’s board is actively exploring strategies to weather the storm. The sharp drop in spodumene prices has prompted a thorough review of the planned expansion and ramp-up of Kathleen Valley, aimed at conserving capital and reducing immediate funding requirements.
Among the measures under consideration are the potential deferral of a four million tonne per annum underground mine, adjustments to the mine plan sequencing, and opportunities for further cost optimizations.
Importantly, the company intends to proceed with its plans for a three million tonne per annum processing plant, and Kathleen Valley remains on track for initial production by mid-year.
While some industry players, such as Core Lithium and Albemarle, have chosen to scale back operations due to the cyclicality of the lithium market, certain market analysts maintain optimism that lithium prices could rebound in 2024.
