Why the Liontown Resources Share Price is Volatile (ASX:LTR)

After surging at the market open today, the Liontown Resources Ltd [ASX:LTR] share price is down 1.1% at time of writing.

Suffering a mixed day of trade in the wake of some speculative news. An unfortunate, but far from uncommon result for a small-cap miner.

Let’s delve into the details, shall we.

Definitive Feasibility Study begins

Liontown, an aspiring lithium producer, has set the stage for its future today. Revealing that its Definitive Feasibility Study (DFS) is now under way.

Depending on the outcome of this DFS, the company will know whether to proceed with the mine or not. A site known simply as the Kathleen Valley Lithium-Tantalum Project.

Up until now, this project has shown plenty of promise. With early estimates suggesting it could support a 2Mtpa mining operation that would last for 40 years.

That kind of potential is certainly enough to get investors interested.

However, whether the final estimates will live up to that remains to be seen. Details that will only be confirmed or adjusted once the DFS is made public. Which we will have to wait for Q4 (October–December) to be finalised.

Perhaps a reason as to why the stock is trading lower today. With an agonising wait ahead for current shareholders.

Nevertheless, it could be a worthwhile wait. At least, that’s what management will certainly be hoping for…

What’s next for the LTR share price?

In the meantime though, while the DFS is being worked on, Liontown will still be busy.

The company has already confirmed that further drilling is to come. The results of which will be used to complete a ‘Process Continuation Study’, data that will help inform and determine the DFS findings.

Therefore, there are plenty of possibilities for more volatile price action over the course of 2021. With management no doubt likely to share this data as it becomes available.

Whether the market will be more receptive though, is something nobody knows. Because as today’s trading shows, this is a stock that carries plenty of risk, even when it has good news to share.

So, if you’re looking for avenues to invest in the emerging lithium sector, perhaps Liontown may not be right for you. Luckily, we have an entire report dedicated to dissecting this popular commodity market.

Check it out in full, including three of our favourite lithium stocks, right here.


Ryan Clarkson-Ledward,
For Money Morning

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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