Liontown Resources (ASX:LTR) Shares Skyrocket on Tesla Deal

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Liontown Resources Ltd [ASX:LTR] shares are up more than 19% today after penning an agreement to supply Tesla with lithium spodumene concentrate from their Kathleen Valley lithium project.

The Kathleen Valley project is in Western Australia, around 400km north of Kalgoorlie. It’s 100% owned by Liontown and has a Mineral Resource Estimate of 156Mt @ 1.4% lithium oxide.

Another huge vote of confidence

Liontown said it’s signed a legally binding sales and purchase term sheet with Tesla to supply spodumene concentrate for five years starting in 2024. Liontown will provide 100,000 dry metric tonnes (DMT) of spodumene concentrate in the first year and 150,000 DMT in the four years after that.

Last year, Liontown completed a $450 million equity raising for the Kathleen Valley project. Construction is scheduled to start in the last quarter of 2022 calendar year, with first production expected in the second quarter of 2024.

The project will have an initial production capacity of 500,000 tonnes per annum of spodumene concentrate, which they are later planning to expand to 700,000 tpa.

The deal with Tesla is subject to conditions, so it could still fall through.

But this follows Liontown entering a similar contract in mid-January with battery maker LG Energy Solution.

As Liontown’s Managing Director and CEO Tony Ottaviano said:

Tesla is a global leader and innovator in electric vehicles and having it sign up to become a
significant customer is a tremendous achievement and another huge vote of confidence in the
quality of the Kathleen Valley Project. This means that we now have two of the premier companies in the global lithium-ion battery and EV space signed up as foundational customers, marking a significant step towards realising our ambition to become a globally significant provider of battery materials for the clean energy market.

A race for lithium supply

Shares for Liontown Resources are trading at $1.70 at time of writing, up from yesterday’s close at $1.39.

Battery and carmakers are on a race to secure lithium supply as EV sales take off and lithium prices keep reaching record highs.

Interested in investing in lithium? Check out our complete guide on how to invest in ASX lithium stocks. For more information, click here.


Selva Freigedo,
For Money Morning

About Selva Freigedo

Selva Freigedo is an analyst at Money Morning. She has a background in financial economics, but what makes Selva´s experiences different to many are the places she has lived and worked. Born in Argentina, she has also lived in Brazil, the US, Spain, and now Australia. She has seen up…

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