Liontown Resources Limited
Beyond the Ticker
Liontown Resources Limited ASX: LTR
Please read disclaimer at the end of the document
Introduction
Liontown, with the ticker LTR, is a battery metal exploration and development company, with a main focus on Lithium at its flagship kathleen valley Project in Western Australia.
1.0 Conclusion
Liontown’s growth has been absolutely incredible, rallying more than 200% this year! Although impressive, the lithium sector as a whole has skyrocketed due to the demand surrounding EVs. Nonetheless, LTR is positioned very strongly to deliver impressive results going into the with their main projects delivering very promising results. Although some may perceive their current share price to be overvalued due to the huge rally, I think there is still a fair way to go for Lionstown, and won't be surprised if price action continues well past the $1.50 mark. For this reason, I rate LTR as a buy. - Che
I am more of a value investor so when I see a company with a marketcap over $1B that isn’t making a profit let alone a revenue I get worried. That being said LTR has a lot of value in the ground which could materialise into profits if sites are sold or digging commences. With strong technical analysis, I rate LTR as a hold. - Thomas
One of the positives of this company is the fact it holds a large asset where the underlying commodity has significantly increased in value, they have a well-experienced board, however, lacks diversity. One of the biggest downfalls is the fact the company is yet to see any revenue so it is difficult to really get a fundamental understanding of how well the company is managed or operates. a straight investment in lithium futures would see a similar result, I would be a hold or sell, depending on the demand for the commodity - Andrew.
2.0 Financial Statement Breakdown
2.1 Majority shareholders
2.2 Directors and Executives
Timothy R B Goyder - Chairman
Mr. Goyder has a long-lasting career in the resource sector with over 40 years of experience. He currently holds two other chair positions, one at DecEx Resources and another at Chalice Mining Limited, where he was previously Managing Director. Mr. Goyder was also previously a director of Strike Energy.
Anthony Tony Ottaviano - Managing Director / CEO
Mr. Ottaviano has been in mining operations for over 30 years, with 17 years of that being with BHP in various executive and VP roles across the globe, he completed his undergrad at Curtin University and then completed his MBA at the University of Western Australia.
David R Richards - Technical Director
Mr. Richards again has a long career in mining, starting as a geologist at Battle Mountain Australia. He was a Managing director of Glengarry Resources Limited for 6 years and has been with Liontown for over 11 years.
Craig Williams - Non-Executive Director
Mr. Williams has a foundation in geology, he was the co-founder of Equinox minerals limited, was the CEO of Brick Gold, and is currently the chairman of Orecorp limited. Mr. William has a Bachelor of Science.
Anthony Cipriano - Non Executive Director
Mr Ciprano, originally a partner at Deloitte has been a non-executive director for just over 7 years. He also holds directorships with Apache finance Pty Ltd, Globachem Australia Pty Ltd. Mr Cipriano is also an executive coach and principal at AJC & Associates. He studied a Bachelor of Business, Accounting and Finance from Edith Cowan University.
Steven Chadwick - Non Executive Director
Mr Chadwick, a lot like this board has a career in the resource sector, He is a founding director of BC Iron limited and previously Managing director of Coventry resources, Pacmin mining limited, and Northern gold limited. He is currently a director of Lycopodium limited as well.
Board Rating - 66 /100
3.0 Operations
LTR is in the exploration phase with promising Pre-Feasibility Studies showing economic potential. They currently have 5 Sites in different stages of pre-mining activities.
4.0 Exposures
LTR has a lot of projects with promising minerals in the ground. They have sites with Lithium, Gold, Nikkle, Copper, and Iron ore. They are ready to adapt to any needs and global trends. LTR’s exposure comes when the projects move from pre-site feasibility tests to actually developing the infrastructure to get the minerals out of the ground. Over the last two years, LTR has been losing $12m a year, the risk is when they shift to start making a profit. There will be a significant capital contribution to develop the mines.
5.0 Technical Analysis
Since the start of 2020, LTR has soared over 1000% from around 8.5c to over 90c at the start of July. LTR has experienced multiple bullish flag setups which have occurred consecutively throughout May. Since its high of 91.5c, Liontown Resources has blown off some steam and is currently situated on its ascending support line. Although LTR has been on an incredible run, all good things must come to an end which could be a probable outcome as will be discussed below.
Point A
Point A shows where long-term support has been established due to the multiple tests of the line occurring in November 2020. It was then retested again in May and rallied higher. After six bounces off support, price action finally broke out and rallied a further 116% from its last retest. The continuation of the support line should be used if price action ever lands around the 50c mark.
Point B
Point B illustrates the current green support line and has been tested twice or three times if the current price action holds or rallies higher. If the price action does decline from here, Point B will be changed into resistance.
Point C
Point C shows the first bull flag playing out. This is important as it alerts and educates traders and investors about the technical play in which they will be able to act should this setup eventuate again. The following volume after the initial rally resulted in the pullback which is textbook for a bull flag. This would have been a perfect entry point.
Point D
Point D can be observed as another bull flag right after Point C. It was set up almost identically to point C through the drop-off in volume before the continuation of the rally. This point was also rather interesting as the ascending support line (Point B) was there to catch the drop-off in price action. This would have been a very safe entry point with a stop loss being placed slightly under the ascending support to enable an extremely small loss if the rally failed.
Pont E
Point E is the tip of the rally and shows some chop around the 88c mark which could act as resistance. Optimistically, point E could also be the tip of a larger bull flag acting as LTR’s third bull flag. If this were the case, volume must pick up and line B must hold as current support.
Point F
Point F is where price action is currently situated which happens to be right on the support line (point B). Ideally, the volume would need to increase here along with a bounce up from the line resulting in the third bull flag playing out. A stop loss should be placed under the line if thinking about taking a long position. If the price breaks through line B, it will be turned into resistance and the position should be reevaluated.
6.0 Competitors
7.0 Recent Market Sensitive Information
Liontown Reaches Agreement to Terminate Royalty - 2nd August 2021.
Agrees to pay Ramelius Resources $30.25m, to terminate the Kathleen Valley Royalty held by Ramelius. Doing so is expected to result in a reduction of operating costs of approximately US$10/t for 6% Li concentrate over the life-of-mine as well as further enhancement via future expansion of the production rate at Kathleen Valley and/or increases in the spodumene concentrate price. The market was somewhat unbothered by the announcement finishing the day down 1%.
June 2021 Quarterly Activities and Cashflow Report – 30th July 2021.
Tony Ottaviano commenced as CEO. $52m capital raising completed after quarter-end to accelerate growth and development programs. Soil Sampling at Buldania lithium project has defined several strong lithium-tantalum anomalies adjacent to the Anna Mineral resource. Initial Reverse Circulation drilling at Koojan JV Project has intersected up to 43m @ 1.7g/t Au. Kathleen Valley Project DFS remains on-track for completion in Q4 2021. The market reacted very positively to the Cashflow report closing the day up 9%.
Strong PGE and gold anomalism confirmed at the Koojan JV project – 14th July 2021.
The highlights from this announcement include: a binding term sheet which grants the ability for Liontown to earn 51% interest in the highly-prospective Koojan project, successful first-pass sampling, infill and extension sampling has now defined anomalies on the interpreted northern extension of the “Julimar Trend” which includes Mallory PGE target defined over a 2km strike length with PGE values up to 160ppb. The Koojan JV project abuts the western boundary of Liontown’s 100% owned Moora project, where initial Reserve Circulation drilling has intersected up to 43m @ 1.7g/t Au.
8.0 ESG
LTR has not received a CSR / ESG rating.
8.1 Environment
The environmental rating of LTR is set to decrease once mining begins.
8.2 Social
The board is 100% male. We would love to see some diversity here.
8.3 Governance
Please refer to 2.2.
9.0 Focus Point
The focus point for Liontown Resources in the underlying price of Lithium. As the resource runs up in value so to does then value of the assets in the ground for Liontown.
Disclaimer
Advice in the Material is provided for the general information of readers and viewers (collectively referred to as "Readers") and does not have regard to any particular person's investment objectives, financial situation or needs. Accordingly, no Reader should act on the basis of any information in the Material without properly considering its applicability to their financial circumstances. If not properly qualified to do this for themselves, Readers should seek professional advice.
Investing and trading involves risk of loss. Past results are not necessarily indicative of future results.
The decision to invest or trade is for the Reader alone. We expressly disclaim all and any liability to any person, with respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance upon the whole or any part of the Material.
