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Lithium is extracted from hard rock by various procedures consisting of wet or dry screening, electromagnetism, flotation along with heat and acid treatment.
As per Australian department of Industry, Innovation and Science, Resources and Energy Quarterly report - December 2019, the lithium market has been witnessing excess supply, which has led to the decline in its price. However, due to the demand from electric vehicle market, for high grade lithium, its price has been predicted to grow in future. Moreover, EV or electric vehicle market is the major driver for the demand of lithium, with predictions fluctuating broadly, based on the Chinese uptake.
The department of Industry, Innovation and Science in Australia further stated that the lithium production worldwide is estimated to have risen to 4.70k tonnes last year, moving up by 18% on pcp. By 2021, the production of the same has been predicted to grow further and reach around 4.89k tonnes.
Let us now go through the recent updates from a few ASX listed stocks in lithium space:
Orocobre Limited (ASX: ORE)
Low lithium prices affected 1H 2020 results though Olaroz Lithium Facility remained one of the lowest cost producers of lithium & outlook for FY20:
The world’s leading resource company ORE listed on both the ASX and Toronto Stock Exchange, is into the production, exploration and development of the resources like lithium carbonate, potash, and boron deposits in Argentina. The company’s flagship project known as Salar de Olaroz lithium project, is situated in the Jujuy province of Argentina (North) region.
ORE stock rose 4.23% on February 21st, 2020 after the company for the first half of the 2020 has posted 10% increase in the total production of lithium carbonate to 6,679 tonnes. However, the company for H1 FY20 has reported the statutory consolidated group net loss of US$18.9 million, which has fallen from the company’s profit of US$24.1 million in 1H 2019. The company posted the underlying net loss after tax of US$9.9 million for 1H 2020. The company’s attributable group EBITDAIX has decreased to US$0.2 million from US$21.0 million, on the back of lower product pricing. At the end of December 2019, Orocobre Group (corporate + 100% SDJ PTE) had generated the cash of US$195 million.
Moreover, for the first half of the 2020, from the Olaroz Lithium Facility, the company has reported the revenue of revenue of US$39.4 million driven by 24% increase in the sales to 6,395 tonnes of lithium carbonate, on Olaroz lithium facility’s sales of 6,395 tonnes of lithium carbonate at average FOB price of US$6,157/t versus 5,163 tonnes at US$12,295/t in H1 FY19.
Further, from the Olaroz Lithium Facility, the company posted the gross operating cash margins of 25% as it incurred the lithium production costs of US$4,643/tonne, making the company to remain as one of the lowest cost producers of lithium in the world. The facility witnessed 40% fall in the gross cash margin to US$1,514/t driven by lower prices of lithium.
Additionally, during the 1H 2020 ended 31 December last year, the company has completed 25% of the Olaroz Stage 2 Expansion and 40% of the 10,000 tpa Naraha Lithium Hydroxide Plant construction. In addition, for fiscal 2020, the company expects to increase the production by approximately 10% on FY 19 with cash corporate costs to be in the range of US$8.5 - 9.5 million.
For Olaroz Lithium Facility, the company projects FY 20 production to at least increase by 5% than FY19, anticipating the average sales price for the March 2020 quarter to be about US$5,000 per tonne (FOB). For Borax Argentina, the company expects FY 20 production to be in the range of 40,000 - 45,000 tonnes.
1H FY 20 Financial Performance (Source: Company’s Report)
On 3 March 2020, ORE last traded unchanged from its previous closing price at $2.740. Also, ORE stock has risen 9.60% in the last three months period.
Galaxy Resources Limited (ASX: GXY)
46% decline in the realised spodumene price in FY 19:
An Australian based provider of mining services Galaxy Resources is into the production of lithium, potash, hard rock and brine assets with its operations in Australia, Argentina, and Canada.
GXY stock rose 5.31% on February 21st, 2020 though the company for the FY 19 has reported the loss after tax of US$283.7 million compared to the profit of US$150.2 million in the FY 18. The profit in FY18 includes the profit of US$146.8 million (after tax) from the sale of the northern tenement package in the Salar del Hombre Muerto to POSCO.
The company witnessed 55% fall in the revenue from operations in FY 19 to US$69.5 million compared to the corresponding period previous year, on the back of fall in the spodumene prices along with 17% decline in the volume sold to 132,687 dmt. There has been 46% decline in the average realised selling price for spodumene in FY19 to US$502/dmt compared to US$927/dmt realised in FY18. The Group’s EBITDA from operations decreased to US$6.8 million for FY19 from US$58.1 million in FY18. At the end of December 2019, the Company had generated the cash of US$100.9 million & its Financial Assets stood at US$42.3 million.
Moreover, at Mt Cattlin Operations, for FY 19 there has been 34% rise in the total mined volume & 22% increase in the production of total lithium concentrate to 191,569 dry metric tonnes. However, there has been 17% fall in the sales of total lithium concentrate in FY19 to 132,444 dmt.
FY 19 Financial Performance (Source: Company’s Report)
On 3 March 2020, GXY last traded at $0.905, rising by 1.117 percent from its last close. Also, GXY stock has fallen 3.76% in the last three months period.
Pilbara Minerals Ltd (ASX: PLS)
Cash gross margin improved in December 2019 quarter:
Mining company, Pilbara Minerals is into the operations and production of lithium & and tantalum with its 100%-owned Pilgangoora Lithium-Tantalum Project.
PLS stock rose 1.64% on February 21st, 2020 after the company released an update on 20 February 2020, for the December 2019 quarter posting an improvement in the cash gross margin to $11.5M compared to cash gross margin loss of $13.3M posted in September 2019 Quarter. As a result, for the first half of 2020, the company posted a consolidated cash gross margin loss of $1.8M on the back of subdued market conditions.
During the first half of 2020, PLS posted the sales of 53,222 dmt or dry metric tonnes of spodumene concentrate that generated the sales revenue standing at $37.8 million. For the first half of 2020, the company has delivered the EBITDA loss of $24.1M, posted depreciation and amortisation of $6.8M and incurred the net financing costs of $11.3M.
The company for the first half of 2020 has reported the Statutory net loss after tax of $63.4M. During the first half of 2020, the company had raised $111.5M through equity and at the end of December 2019, had generated the cash of $105.5M and had working capital of $94.8M.
On 3 March 2020, PLS last traded at $0.250, falling by 3.846 percent from its last close. Also, PLS stock has fallen 20.00% in the last six months period.
