Liontown slides over review of WA project expansion

The news: Shares in Liontown Resources have tumbled after the lithium explorer said it could defer some expansion at its flagship Kathleen Valley project in WA to reduce funding requirements.

The numbers: Liontown shares slid to a fresh 52-week low of 88.5 cents in early trading on the ASX, and were still down nearly 18% at 98 cents at around 10:45am AEDT. The company said it is reviewing the planned expansion at Kathleen Valley which could include a postponement of 4 million tonne per annum underground development work, sequencing adjustments to the mine plan, and scope for additional cost cuts. There will be no change to the 3 MTPA plant capacity design under construction, it said.

The context: The review follows the recent slide in spodumene prices and seeks to preserve capital and reduce near-term funding requirements. In October, Liontown sealed a $1.18 billion funding package for Kathleen Valley, one of the world’s biggest lithium projects. This included $760 million in debt funding but the significant reduction in lithium price forecasts since then has affected its approval. The company said it is now discussing a revised, smaller debt facility. Liontown was forced to scramble into the fundraising after global miner Albemarle abandoned its takeover bid for the company, following the acquisition of a 19.9% blocking stake by Gina Rinehart’s Hancock Prospecting. Albermarle has since sold off its stake.