Liontown’s $226m Kathleen Valley ramp-up

Liontown Resources (ASX: LTR) has launched a full underwritten institutional placement to support the underground transition at its Kathleen Valley lithium mine in WA.

Underground production began at the site in April and, following the ramp-up, full scale underground operations are expected by September 2026.

Part of the placement, which includes about 364.4m shares to raise at $0.73 per share, is a $50m investment from the Federal Government’s National Reconstruction Fund Corporation (NRFC).

NRFC chief executive Davud Gall says Australia is well-positioned to be a competitive, long-term supplier of lithium to the rest of the world and local lithium production is important to the nation’s economic security and resilience.

“Our investment in Liontown will help to attract private capital and develop Australia’s resources sector,” he said.

“It is aligned with the government’s strategy of transforming Australia into a global leader in the critical minerals supply chain.”

Liontown will also allow existing eligible shareholders to participate in a non-underwritten share purchase plan to raise an additional $20m.

The plan will see all members of the company’s board of directors participate, with the funds to further strengthen its balance sheet and maintain resilience amid volatile lithium pricing.

Liontown managing director Tony Ottaviano says the company is well placed to remain resilient in this low-price environment whilst retaining flexibility to pursue low-cost, high return opportunities to maximise value.

“We have preserved optionality over our growth options including the potential expansion of Kathleen Valley to 4mtpa which, currently, remains subject to improving market conditions,” he said.

“Our collaborative relationship with customers and partners provides a unique opportunity set of strategic and value-accretive growth opportunities which we continue to evaluate”

The placement’s funds are expected to fortify Liontown’s balance sheet to a pro forma cash balance of around $422m, provide a prudent liquidity buffer to support the Kathleen Valley ramp-up and general corporate costs during a period of downturned lithium prices.