Liontown Resources Ltd (ASX: LTR) shares are sinking on Wednesday.
In morning trade, the lithium miner's shares are down 5% to a new 52-week low of 61.7 cents.
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Liontown shares tumble despite big news
Investors have been selling the company's shares this morning despite the release of an update on production at the Kathleen Valley Lithium Project in Western Australia.
This appears to have been driven by a broad market selloff, which has offset the aforementioned announcement.
In respect to the announcement, Liontown revealed that its production momentum is building after producing more than 10,000 tonnes of concentrate since commencing operations at Kathleen Valley. Management believes this reflects its robust plant operation and availability.
The good news is that the concentrate produced to-date has a weighted average grade of 5.2% Li2O, with all key parameters meeting or exceeding contractual product specifications. This allows it to be delivered under contract to an existing customer.
The concentrate stockpile is currently split between site and port, with approximately half of the stockpile already at the port. The remaining concentrate stockpiled at Kathleen Valley will be progressively transported to the port ahead of the first shipment. This is planned for September.
'Another remarkable achievement'
Liontown's Managing Director and CEO, Tony Ottaviano, was pleased with what the company achieved. He said:
Reaching significant levels of concentrate stockpiles at Kathleen Valley, with a weighted average grade of 5.2% Li2O, is another remarkable achievement for our team and the plant design, especially considering it's only one month since we announced first production.
The successful mobilisation of our logistics chain and the operational readiness of our site facilities underscores our strong commitment to delivering on our commitments. As we eagerly anticipate our first shipment, scheduled for September, this progress positions us on the cusp of revenue generation, reinforcing our dedication to enhancing shareholder value.
Should you invest?
Analysts at Bell Potter see a lot of value in Liontown's shares at current levels. Though, they concede that the company represents a high-risk investment option.
A recent note reveals that the broker has a speculative buy rating and $1.90 price target on the lithium miner's shares. Based on its current share price, this implies potential upside of 200%+ over the next 12 months.
Commenting on its bullish view, the broker said:
LTR's 100% owned Kathleen Valley lithium project remains highly strategic with initial production imminent, a long mine life and located in a tier-one location. LTR has offtake contracts with top tier EV and battery OEMs. Under our modelled assumptions, we expect that LTR is fully funded to free cash flow. We have made no changes to our earnings estimates in this report. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
