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Date : 03/06/2022

Shares in Liontown Resources (ASX: LTR) gained on Monday following an announcement to extend the offtake term sheet with Tesla

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 maximised by improving the project’s already strong economics in the future.

Previously the company announced a deal with Tesla according to which LTR will supply spodumene concentrate once the Kathleen Valley project begins production in 2024. On Monday, the company announced that both the companies agreed to extend the offtake term sheet.

LTR: 1H22 Key Financials

LTR stock is currently gaining around 148% in one year. LTR stock is currently valued at $1.39 and has a market cap of around 3.05 Billion AUD.

liontown resources asx

  1. 1H22 results show that the company’s other income was $1.12 million.
  2. Its gain on the demerger was approximately $90.96 million.
  3. LTR’s NPAT was roughly $48.12 million. Last year, the company’s loss was $4.9 million in the same period.
  4. The company’s basic and diluted earnings per share in 1H22 were $0.0249 and $0.0247, respectively.
  5. As of 31 December 2021, the company had cash equivalents of around $170.99 million.

LTR: Liontown Resources and Tesla Extends Offtake Term Sheet

Liontown Resources Limited (ASX: LTR) and Tesla have agreed to extend the expiration date of their binding offtake term sheet to 6 June 2022. As a result of the prolongation, discussions between Tesla and Liontown may move toward a final, legally binding offtake agreement.

According to the Offtake Term Sheet with Tesla, the company will deliver up to 150,000 dry metric tonnes per year of spodumene concentrate produced at Kathleen Valley beginning in 2024, or around one-third of the project’s initial SC6.0 production capacity of 500ktpa.

LTR: The Impact

When the deal was previously announced, it was supposed to end if both the companies had not completed the negotiation for a definitive agreement. The extension of the term sheet reflects that investors should be optimistic about finalising the deal between two giant companies. Kathleen valley project is LTR’s most significant project and has previously gained another corporate client LG Energy Solution in the subsequent month when the deal with Tesla began.

LTR: Outlook of the company

The company is in pursuit of Tier1 corporate buyers in the global battery value chain. Liontown is now conducting Pre-feasibility studies for a lithium hydroxide processing facility in Washington. The company’s outlook seems optimistic as its Kathleen Valley projects show some great production numbers once it starts producing in 2024. The cash cow project will bring in massive revenue streams once it begins.

Conclusion

The LTR stock has begun the week with some positive trends. The extension of the offtake term sheet has drawn some attention. Previously on 2 May, Liontown and LG Energy Solution (LGES) signed a comprehensive full-form Offtake Agreement to provide spodumene concentrate from the Kathleen Valley Lithium Project in Western Australia. Once the production begins in 2024, both deals will provide the starting cash for the project needs. Expectations are that the negotiation will end with similar results as it did in the LGES deal.

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