Liontown Resources Limited (ASX: LTR) is a battery metals exploration and development company based in Western Australia with a Tier-1 discovery at its prestigious Kathleen Valley Lithium-Tantalum Project. The firm is focused on the exploration and development of battery metals.
With its swift rise to the cutting-edge modern era lithium developers, Liontown is committed to ensuring that the prospects presented by the world-class Kathleen Valley deposit are maximized by improving the project’s already strong economics in the future.
Today the stock price of Liontown Resources Limited (ASX: LTR) surged in the market after the company announced its deal with Tesla. Two major global players in their relative industries have entered into an iconic agreement. LTR is a leader in lithium-ion batteries, while Tesla is a known Electric Vehicle premium brand. The five-year lithium supply deal with Tesla is a significant breakthrough in LTR’s business. Kathleen Valley has obtained two offtake agreements. LG Energy Solutions (ASX statement, 12 January 2022) was the first. Liontown is now covered for more than half of its expected production with the Tesla deal.
LTR gained 280% in the Trailing Twelve Months
LTR has gained significantly in the last twelve months. It’s mainly due to signing two important deals. The company is currently making zero revenue but is expected to make incredible revenue after supplying the two primary clientele.
- LTR currently trades at $1.64, gaining more than 18% compared to the last close. Yesterday LTR closed at $1.39.
- The stock gained more than 280% following two significant deals in the trailing twelve months.
- The stock year range is between $0.38 to $1.68.
- The current market cap of the company is around 3.60 Billion AUD.
- The company’s revenue is zero, but the deals will bring a massive revenue stream for Liontown.
Key points of the agreement with the Tesla
- For the supply of Lithium Spodumene Concentrate from the Kathleen Valley Lithium Project in Western Australia, Liontown and Tesla have signed a legally binding sales and purchase agreement. In 2024, the first five-year term is set to begin.
- Initially, Tesla will purchase 100,000 dry metric tons (DMT), increasing annual purchases to 150,000 DMT.
- Lithium Hydroxide Monohydrate market prices are used to benchmark pricing calculations based on a formula.
- By 2025, Liontown must begin commercial production at the Kathleen Valley Lithium Project to meet the terms of the agreement.
- By 30 May 2022, unless both parties agree to an extension, the agreement will end if the parties have not completed negotiations and executed comprehensive, definitive agreements.
- The Kathleen Valley Lithium Project’s Tier-1 credentials have been bolstered by the recent announcement of a foundational offtake agreement between Liontown and LG Energy Solutions.
- A deal with Tesla is in line with Liontown’s long-term offtake strategy, which focuses on Tier1 customers in the worldwide battery value chain.
- Over half of Liontown’s anticipated lithium production for the first five years of operation has already been contracted to the Kathleen Valley Lithium Project, and talks with other possible Tier-1 clients for the additional production are ongoing.
LTR CEO’s remarks on the deal
The CEO of the company Tony Ottaviano said that our second offtake sales deal with Tesla is a tremendous milestone for Liontown in developing the Kathleen Valley Lithium Project. We are delighted to have signed this arrangement with Tesla. The Kathleen Valley Project’s ability to secure Tesla as a major customer is a significant accomplishment and a strong endorsement of the project’s quality.
Outlook
Liontown Resources Limited (ASX: LTR) is a pre-revenue company working on the Kathleen Valley Lithium Project. The company has cracked two important deals, which will eventually start to pay for the years of the development. The company is targeting Tier1 customers in the global battery value chain. Liontown is now conducting Pre-feasibility studies for a lithium hydroxide processing facility in Washington.
Our suggestion
Liontown Resources Limited (ASX: LTR) has gained two major corporate customers in just one month. First, they inked the deal with LG Energy Solution and now Tesla. It is a major development in the history of the company. LTR signing the agreement with Tesla made it the star of the show in today’s trading, and its value surged exceptionally in today’s trading session. Liontown Resources Limited (ASX: LTR) is looking forward to penning a new deal with premium customers, which will eventually contribute to the company’s growth. Therefore, LTR is an excellent growth stock for the future.
