Results rundown: BHP leads the December reporters as under pressure lithium stock Liontown impresses

ASX miners are entering the trenches for their quarterly showdowns with analysts, with BHP and LTR’s December reports impressing.

Pic: Getty Images

• BHP leads quarterly reports with solid numbers from its iron ore, coal and copper businesses

• Northern Star's Super Pit disappoints, but Liontown records gain after Kathleen Valley delivers positive operating cash flow in December

• Yancoal up after hitting coal guidance

The world's biggest miner BHP (ASX:BHP) has strengthened production expectations across key segments after a strong second quarter, saying it plans to hit the upper half of iron ore, met coal and energy coal guidance in FY2025.

Copper output grew 7% QoQ in December to 511,000t, powered by a 12% QoQ increase in production at Escondida in Chile, the world's biggest copper mine, while steelmaking coal production fell 2% to 4.4Mt and energy coal rose 1% to 3.7Mt at Mt Arthur.

Nickel was down 59% to 8000t as BHP redeployed 800 workers and sent its WA operations into care and maintenance until at least February 2027, while its flagship iron ore business lifted 2% on an equity basis to 66Mt, 64.8Mt from the Pilbara (73.1Mt on a 100% basis) on "strong supply chain performance".

BHP produced 128Mt for the first half of the year in the Pilbara, or 145Mt on a 100% basis, on track to hit the upper end of its 282-294Mt guidance range, though prices through the six month to December 31 were 22% lower YoY at US$81.11/t.

Volumes at the Samarco JV in Brazil with Vale lifted 9% to 2.8Mt for the first half, or 5.5Mt on a 100% basis.

Most of BHP's guidance set at the start of the financial year remains intact, though its South Australian copper business has been downgraded from 310-340,000t for FY25 to 300-325,000t after a 6% YoY drop to 144,600t through the first half of FY25.

Escondida's first half output of 644,000t was 22% higher YoY and marked a ten year production record, BHP CEO Mike Henry said.

Net debt is expected to have been between US$11.5-12.5bn on December 31, to be confirmed in next month's financials, though payments on the Samarco dam settlement and a US$2bn cash outlay on the closure of the Vicuna copper acquisition, completed in January, are expected to take it to the top end of BHP's US$5-15bn target range in the second half.

RBC's Kaan Peker said the quarter was mixed, with production largely as expected given the impacts of wet weather at WAIO and BMA coal and previously flagged power outages in South Australia. But realised prices for iron ore and copper came above RBC's expectations, with net debt far higher than consensus forecasts of US$10.1bn.

Positive start for Liontown

Sold off heavily over the past year, lithium miner Liontown Resources (ASX:LTR) surged over 9% in morning trade after announcing its Kathleen Valley mine was cash flow positive in its first three quarter of proper operations.

The project in WA's Goldfields delivered $16.7m in net cash from its operating activities, pulling in realised prices of US$806/t on a 6% Li2O basis after producing 88,683dmt and shipping 81,341t of 5.2% Li2O spodumene concentrate in the three months to December 31.

All in sustaining costs came in at a 6% equivalent of $1170/t or US$763/t, with spot prices now close to US$900/t according to Fastmarkets as converters stock up ahead of Chinese New Year.

At the same time, Liontown continued to burn through its cash on hand, with its bank balance dropping 27% from $263.1m to $192.9m, though that excludes a $25m cash security held by Export Finance Australia that LTR is working to have released by the end of the financial year. LTR also held 24,904dmt in saleable concentrate on top of cash and trade receivables of $205m.

“Liontown has continued to make strong progress at Kathleen Valley during the December 2024 quarter, with the ramp-up of production continuing to meet, and in some areas exceed expectations," LTR managing director Tony Ottaviano said.

"We are now a fully operational producer, having shipped over 100,000 wet metric tonnes of spodumene concentrate to customers since the commencement of production at the end of July 2024.

"Notably, the company generated positive net cash from operations in the first full quarter since we commenced production, in July 2024. Our performance this quarter reinforces that Liontown is firmly on track to achieve its ambition of becoming an established world-class producer in the lithium sector."

LTR expects costs to come down as production levels ramp up, but Ottaviano said it would remained focused on 'optimisation' amid a lower price lithium environment.

"Through the excellent work of our operations team, this quarter’s performance demonstrates that the ramp-up of Kathleen Valley is proceeding to schedule. With both spodumene and tantalum circuits in production, alongside strategic stockpiles in place for the underground transition in FY26, we are well-prepared to support operations well into the future," he said.

"As we navigate the current low-price lithium environment and given our strategic approach to continuous improvement, ongoing optimisation will continue across our business. We remain focused on concluding our processing plant ramp-up, starting underground stoping production and lifting processing plant performance."

Unit operating costs for H2 are expected to fall to $755-855/dmt SC6e compared to $1000/t (US$652/t) in the December quarter. On the technical side, plant lithia recoveries rose 22% to 55% (59% in the month of December), with the company planning to hit a 70% target by Q3 FY26.

Liontown's 2021 DFS had modelled average lithia recoveries of as much as 78%, though most lithium miners have required substantial adjustments to fine tune their processing once operations have begun.

Diverging fortunes

While it was a good day for BHP, Liontown and coal producer Yancoal, Northern Star Resources (ASX:NST) fell into the red as its mainstay Super Pit operation dropped short of consensus forecasts in the December quarter.

Executives from Australia's largest standalone gold producer said on a conference call that performance would improve in the back half of the year with remediation work to open the high grade base of the Golden Pike cutback, cut off by a rockfall several years ago, now complete.

NST produced 410,000oz in June at AISC of $2128/oz, around 4% lower and 6% higher than consensus, respectively.

KCGM, the entity that holds the Super Pit, Fimiston underground and Mt Charlotte underground mines, produced 98,000oz, around 22% short of consensus estimates of 127,000oz.

"The miss was driven by KCGM, where gold production came 23% below our expectations. At the key site there were tonnage delays both in the pit and underground. This meant more stockpile was processed reducing mill grade," RBC's Alex Barkley said.

"However, NST expects the East Wall remediation is now complete and much greater production in H2 should be achieved. Other sites performed roughly as expected in Q2. After a mill-shutdown heavy Q1, and this Q2 softness; NST's YTD rate (1568kozpa) is tracking below its FY25 guidance (1650-1800koz, RBCe 1726koz, cons 1712koz). NST has always expected H2 to be stronger, and has reiterated all FY25 guidance."

Yancoal Australia (ASX:YAL) meanwhile, was up close to 5% after hitting 2024 guidance, producing 36.9Mt of saleable coal, with costs expected to be in the mid-range of its $89-97/t operating cost guidance and capex in the lower half of its $650-800m range.

YAL boasted solid margins despite weaker met coal pricing, pulling in $176/t on its sales in the fourth quarter (13Mt saleable production – 9.7Mt attributable – and 10.4Mt of attributable coal sales.

That saw its cash balance lift a hefty $480m to $2.46bn. YAL's share price growth has been hampered in recent months by investor concerns it could overspend on M&A after forgoing an interim dividend to keep powder dry for a deal in August.

While Peabody won the auction for Anglo's coal mines in Queensland, EMR's $3bn Kestrel mine remains on the market.

CFO Kevin Su told investors on a call this morning the company, which counts China's Yankuang Energy as its largest shareholder, had a "very robust M&A discipline" and capital management philosophy.

YAL recently announced the departure of long-running CEO David Moult, with executive committee chair Ning Yue replacing him in an acting role.

At the smaller end of the market, Hillgrove Resources (ASX:HGO) announced copper production from its Kanmantoo mine in South Australia of 2637t at an all in cost of US$3.97/lb and all in sustaining cost of US$3.60/lb.

That came alongside high grade results from underground grade control diamond drilling of 18.55m at 5.69% copper and 1.02g/t gold uncut from 187m and 16m at 2.96% copper, 0.42g/t gold 197m downhole at the Nugent area.

HGO has set 2025 guidance of 12,000-14,000t at an all in cost of US$3.40-3.90/lb.

At Stockhead, we tell it like it is. While Hillgrove Resources is a Stockhead advertiser, it did not sponsor this article.

Originally published as Results rundown: BHP leads the December reporters as under pressure lithium stock Liontown impresses