LTR +2.51%: The lithium junior posted FY26 production that was better than the headline revenue number suggests. Sales more than doubled as Kathleen Valley ramped up, and while revenue came in slightly below expectations, earnings were more than 20% ahead of consensus and the company swung comfortably back into profit. With the open-pit-to-underground transition now complete, attention shifts to The next production step-up and converting stronger lithium pricing into sustained cash generation.
Key results:
- Sales revenue of A$639.1m, more than double A$297.6m last year, but ~2% below A$654.4m consensus.
- Underlying earnings (EBITDA) of A$147.4m, up from A$20.1m and ~23% ahead of A$119.5m expected.
- Net profit (NPAT) of A$92.6m, swinging from a A$193.3m loss and comfortably ahead of the A$65.2m loss consensus was forecasting.
- FY26 capex of A$129.2m, broadly in line with A$130.3m expected and well below the development-heavy spend of FY25.
- Existing FY27 production and capex guidance was reaffirmed.
Kathleen Valley is already generating better economics than the market expected, despite the mine still being in ramp-up mode. Output should accelerate after Q1 from the current 1.5Mtpa run-rate toward 2.8Mtpa by the end of FY27, while early works on the expansion are also underway. Q1 shipments will be softer due to surge events and planned maintenance at Geraldton Port, but we’d view that as timing noise provided the underground ramp remains on track.
MM’s view: This was a good result from LTR. Revenue was a touch light, but we’d happily trade a ~2% revenue miss for a ~23% EBITDA beat, particularly at this stage of Kathleen Valley’s development. The swing back into profit, moderating capex and improving lithium backdrop all suggest the heavy lifting of building the mine is starting to translate into better financial outcomes. The next test is execution: getting underground production to 2.8Mtpa without blowing out costs would materially improve LTR’s operating leverage. Lithium prices will remain the biggest swing factor, but Kathleen Valley is proving it can be a serious operating asset rather than simply an expensive development story. We bought the stock two weeks ago in the Emerging Companies Portfolio and today’s result reinforces our position.
MM remains long and bullish LTR
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