Liontown Resources Ltd (ASX: LTR) shares are catching the eye on Wednesday.
In morning trade, the lithium miner's shares are down 4% to 45 cents.
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Why are Liontown shares sinking?
Investors have been selling the company's shares this morning after a broad market selloff overshadowed the release of a big announcement.
At the time of writing, the ASX 200 index is down 2%.
In respect to the company's announcement, Liontown revealed that it has successfully commenced underground production stoping at the Kathleen Valley Lithium Operation's Mt Mann orebody, with the first blast fired on schedule.
According to the release, management notes that this marks a key milestone in the transition from open pit to underground operations over FY 2026.
As Australia's first underground lithium mine, the company believes it is expected to offer distinct advantages over traditional open pit operations. This includes through cleaner ore extraction by reducing ore dilution from waste contamination, supporting higher lithia recoveries, and improved ore fragmentation for optimised throughput.
It highlights that during March, trials confirmed the processability of the underground ore, with a head grade of ~1.5% Li2O and recoveries exceeding 70%, with further optimisation through recovery improvement projects still to come.
What's next?
Liontown advised that its focus remains firmly on continuing the mine development to advance the decline, opening additional working areas, and ramping up the underground operations progressively.
The key objective of the underground operations, in the short to medium term, is to safely target high-margin ore and maximise value with the mill expected to be supplied solely by underground volumes by the fourth quarter of FY 2026.
Commenting on the news, Liontown's managing director and CEO, Tony Ottaviano, said:
The successful commencement of underground stoping at our Kathleen Valley Lithium Operation on schedule is a proud milestone for Liontown. This achievement was made possible by advanced planning, the dedication of our team and the support from our mining partner, Byrnecut, ensuring the first stope blast at Mt Mann proceeded as planned.
As part of normal preparations and planning, we undertook underground ore trials in the March quarter, in advance of first stoping, to understand the optimal plant performance settings. The trials delivered results in line with our study work, which reinforces our confidence in transitioning to full underground operations. This milestone further strengthens our foundations for long-term value creation and future shareholder returns.
Following today's move, Liontown shares are down 65% from $1.30 over the past 12 months.
