Liontown Resources is the ASX's newest lithium miner having commenced production at Kathleen Valley in July 2024. Kathleen Valley has a current Mineral Resource Estimate of 156Mt at 1.4% lithium and could produce over 500ktpa over a 23-year life of mine. Over 80% of this is Measured or Indicated. The project’s economics, outlined in the 2021 DFS include an NPV of A$4.2bn and a 57% IRR after tax.

In early 2019, the company was just another small cap explorer, but has never looked back since discovering Kathleen Valley. Shares underwent exponential growth because of the company's success in discovering lithium and constantly growing the resource. The lithium bull run helped things further.

The correction in lithium prices had a sharp impact on the company, causing two-thirds of its value from the $6bn+ all time high to be shed, and for a proposed takeover deal from Ablemarle to fall through. Rumours that Gina Rinehart was going to buy the company, arising from her accumulation of a near 20% stake, came to nothing. And barely 3 months after signing a commitment letter and credit approved term sheet for a $760m debt financing package, it was torn up after several members of the syndicate withdrew. This was not just because of low lithium prices, but cost blowouts at the project. By January 2023, $895m in capex had been estimated, up from $240.5m only 3 years prior.

But the company negotiated a smaller A$550m facility and was able to enter production in mid-CY24. Nameplate capacity of 3Mtpa is expected by the end of the March quarter of CY25. Nonetheless, CEO Tony Ottaviano has admitted the mine is operating at a loss right now and has publicly called for the WA government to consider royalty relief for the lithium sector.

Core Lithium’s flagship project is the Finniss Lithium Project covers 500 square kilometres within the NT’s Bynoe Pegamite Field lying 88km trucking distance from Darwin Port.

Lithium was first discovered at Finniss in 2016 and the project has grown ever since. The April 2022 Definitive Feasibility Study (DFS) reported a JORC compliant Mineral Resource of 15 million tonnes (Mt) at 1.3% lithium oxide. The study reported a Pre-Tax IRR of 80%, an NPV of $114m and free cash flows of $158m from $501m revenue. A 180,000tpa operation was anticipated. Keep in mind this was based on a spodumene concentrate price of $981/t, far below the all time high of $8,125/mt in November 2022. Production at Finniss began in April 2023.

The fall in lithium prices in 2023 hurt the company. Initially, Core Lithium pledged to remain profitable for a few years even amidst shrinking margins. By the end of 2023 however, it suspended production and told investors it would just focus on processing stockpiled ore.

However, it is not entirely doom and gloom. Despite pausing production, the company is continuing to sell spodumene concentrate it had stockpiled, and it sold 33,027dmt as well as 19,771dmt of lithium fines during the June quarter of CY24. It expects to sell over 97,000dmt for the entire CY24, ahead of prior guidance of 80-90,000dmt. With an $87.6m cash balance as at June 30, 2024, it won't need a capital raising anytime soon. The company is currently making assessments about a potential re-start of the production. And its recent attempt to buy Charger Metals shows that the company is on the lookout for other lithium projects.

Mineral Resources is a standout choice for investors, especially given the booming demand in the lithium sector. The company has significantly boosted its lithium production, focusing on key locations like Wodgina and Mt Marion. This is incredibly timely since the demand for lithium is skyrocketing due to its use in electric vehicles and renewable energy solutions. Mineral Resources is ideally positioned to benefit from this growing demand, which could spell substantial profits for investors.

Financially, the company is in excellent shape, showing strong revenue growth and effective cost management. Their strategic financial decisions, including successful fundraising and significant investments in growth projects, demonstrate their commitment to long-term growth and profitability. These efforts show that Mineral Resources is thinking ahead to secure a strong position in the competitive market.

What's more, Mineral Resources isn't just mining lithium; they're also moving towards producing battery materials, which helps them add more value and reduce the risks that come with the price fluctuations of raw materials. This strategic move allows them to tap into more lucrative aspects of the lithium market as it grows.

Owning and running top-quality mining assets in Australia, a country known for its stable mining regulations, gives Mineral Resources a significant edge. This stability is crucial for smooth and efficient mining operations.