Liontown Resources’ Kathleen Valley lithium mine received Ford Motor Company’s tick of approval in the form of a $300m debt facility to further development of the site. Macquarie notes Ford signed a binding offtake agreement for up to 150,000 dry metric tonnes of spodumene per annum.
The broker highlights this latest contract means Liontown Resources has secured offtake agreements for 450,000 dry metric tonnes spodumene per annum, or 90% of planned production.
Liontown Resources has now formally approved development of the project, but has lifted pre-production capital costs 15%. Macquarie lowers its earnings forecasts -8%, 8% and -4% in FY24, FY25 and FY26 respectively to account for increased financing costs.
The Outperform rating is retained and the target price decreases to $1.85 from $1.90.
Target price is $1.85.Current Price is $1.12. Difference: $0.73 – (brackets indicate current price is over target). If LTR meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges – negative figures indicate an expected loss).