Liontown Lithium Production Holds Flat as Kathleen Valley Shifts Underground

Liontown

Liontown lithium production was flat in January-March as the Kathleen Valley operation completed its first full quarter as a fully underground mine. The Australian miner produced 96,000t of spodumene concentrate during the quarter, unchanged from a year earlier but down 9% from the previous quarter.

Liontown lithium production is now being reshaped by the transition away from previously mined open-pit ore toward underground feed. The shift is important because underground ore is expected to support more stable grades and recoveries as Kathleen Valley moves deeper into its long-term operating model.

Liontown lithium production also faced shipment disruption from tropical cyclone Narelle, which temporarily affected port operations at Geraldton in Western Australia. Two shipments were delayed, including one that was deferred into early April.

The quarter shows a lithium producer moving through a technical transition rather than a demand-led slowdown. Kathleen Valley is still ramping toward its longer-term target of around 500,000 t/yr of spodumene concentrate.

Underground Feed Improves Recovery Outlook

Kathleen Valley’s underground mining performance improved during the quarter. Underground ore mined totalled 402,000t, up 31% from the previous quarter, with an average grade of about 1.4% lithium oxide.

Lithia recoveries improved in late March as underground ore became the dominant feed source. Liontown achieved its 70% recovery target, while underground ore accounted for 67% of the feed mix in the first weeks of April.

This is a key operational milestone. As the feed mix shifts away from open-pit stockpiles, Kathleen Valley should gain better consistency in processing performance, grade control and recovery rates.

However, the transition also affected quarterly output. Lower production volumes and variable recoveries pushed unit operating costs higher, showing that underground ramp-up periods can create temporary cost pressure before stable-state performance is reached.

Kathleen Valley has a 2.8mn t/yr mining capacity and is expected to produce around 500,000 t/yr of spodumene concentrate. Reaching that level will depend on sustained underground ore delivery, process stability and shipment execution.

Port Disruption and Cost Pressure Shape Near-Term Performance

Cyclone-related disruption affected sales during the quarter. Tropical cyclone Narelle interrupted operations at Geraldton for several days in March, delaying two shipments.

Liontown ended the quarter with 26,270 dry metric tonnes of concentrate in inventory. This was up from 13,800dmt in the previous quarter and 22,519dmt a year earlier, partly reflecting shipment timing.

Unit operating costs on a fob sales basis rose to A$981/t from A$910/t in the previous quarter. The increase was driven by lower production volumes and recoveries during a period of variable feed mix.

This cost movement matters because lithium markets remain highly competitive after the price correction of the past two years. Producers need scale, grade control and low operating costs to defend margins.

Kathleen Valley’s underground transition could improve cost performance over time if recoveries remain stable and mined volumes continue rising. But the quarter shows that ramp-up execution remains critical.

For the wider lithium market, Liontown’s flat output adds to a more disciplined supply picture. New spodumene supply is still entering the market, but operational transitions, weather disruptions and cost pressure continue to affect how quickly nameplate capacity becomes reliable production.

The Metalnomist Commentary

Liontown’s quarter should be read as an underground ramp-up story, not a weak demand signal. Kathleen Valley’s recovery performance is improving, but cost control and shipment reliability will determine how competitive the operation becomes as lithium supply remains under pressure.