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Highlights

  • Shares fall 4% to 45 cents amid broader ASX market decline

  • Liontown begins underground stoping at Mt Mann, marking a first for Australian lithium mining

  • Company targets full underground mill supply by Q4 FY2026

Liontown Resources Ltd (ASX:LTR) shares slipped 4% in early trade on Wednesday, down to 45 cents, despite announcing a significant operational milestone at its flagship Kathleen Valley Lithium Project in Western Australia.

The decline came as part of a wider market selloff, with the ASX 200 index dropping 2% at the time of writing. While market sentiment weighed broadly across sectors, Liontown’s announcement offered a key update in its development journey.

In a morning release, the lithium developer confirmed it has successfully commenced underground stoping operations at the Mt Mann orebody, with the first production blast fired on schedule. The development marks a pivotal moment in the transition from open pit to underground mining, which the company is targeting for completion over financial year 2026.

Liontown noted that Kathleen Valley is set to become Australia's first underground lithium mine, positioning the project at the forefront of next-generation lithium extraction. Management believes underground operations offer several advantages over traditional open pits, including cleaner ore extraction, reduced waste dilution, and enhanced throughput due to improved ore fragmentation.

The company revealed that March trial runs demonstrated promising performance, with underground ore delivering a head grade of ~1.5% Li₂O and recoveries exceeding 70%. Further recovery improvement initiatives are underway as part of the optimisation strategy.

Despite the milestone, investor enthusiasm was tempered by broader market dynamics, leading to the share price pullback. However, analysts and stakeholders may view the operational progress as a long-term positive, particularly in a sector where supply chain security and project readiness are becoming increasingly important.

Looking ahead, Liontown remains focused on advancing the underground decline, opening new working areas, and ramping up extraction to meet its production goals. By the fourth quarter of FY2026, the mill is expected to be fully supplied by underground ore, a key objective in the company’s plan to target high-margin material and maximise operational value.