On 9 November 2018, Altura Mining Limited (ASX: AJM) made an announcement regarding a new binding offtake agreement with GFL International Co., Limited (GFL) which is a wholly owned subsidiary of leading global lithium producer in Ganfeng Lithium. Following this news, the share price of the company increased by 27.77 percent as on 9 November 2018 (AEST 1:40 PM).
According to the release, the new agreement will diversify Altura’s customer base and it will lock in 100 percent of planned production from its recently commissioned flagship Altura Lithium operation in Western Australia. The agreement will also diversify GFL’s existing supplier’s base and it will provide GFL an option to increase supply through access to 50 percent of Altura Mining’s Stage 2 expansion production from the Altura Lithium operations. As per Altura’s Managing Director Mr. James Brown, an offtake agreement with GFL is further proof of the quality of the product Altura is producing from the Altura Lithium operations.
GFL has committed to a minimum of 70,000 dmt per annum of 6 percent grade spodumene concentrate (SC6.0) with minimum 8,000 dmt commitment in 2018. In addition to this deal, Altura has reached an agreement with existing offtake partner, Shaanxi J&R Optimum Energy(JRO), which is going to reduce its current binding offtake agreement commitment from a minimum of 100,000 tpa to a minimum of 50,000 tpa from 2019 onwards and Altura is also provided with an opportunity to expand its existing customer base with the removal of JRO’s rights to additional tonnage produced. Management believes this will provide the company with more flexibility as JRO aims to conclude its restructuring.
In FY18, Altura earned a revenue of $1.16m against a revenue of $1.27m in the last year. The cost of sales reduced from $1.07m in FY17 to $0.772m. The company earned operating profit of $0.39m in FY18 which was $0.20m in the last year. The net loss of the company increased from $6.16m in FY17 to $12.82m in FY18. The basic and diluted loss per share from continuing and discontinuing operations increased from 0.45 cents in FY17 to 0.75 cents in FY18. The total current assets of the company increased from $26.08m in FY17 to $41m in FY18. The net assets of the company increased in 2018, with noncurrent assets significantly higher due to the construction phase of the Lithium Project. During FY18, funds were sourced from a funding facility of US$110m and a $26m placement. The Net cash outflow from operating activities reduced from $5.55m in FY17 to $5.45m in FY18. The company was having cash and cash equivalent of $28.78m as on 30 June 2018. In June 2018, the company divested its one-third interest in the Delta coal mine and associated infrastructure. There was no cash consideration in the transaction, and Altura holds no future rights relating to the Delta coal mine.
In the past six months, the share price of the company decreased by 50.68 percent as on 8 November 2018. AJM’s shares traded at $0.230 with a market capitalization of circa $327.67 million as on 9 November 2018 (AEST 1:40 PM).
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