- The lucrativeness of electric vehicle (EV) industry has accentuated due to its sustainable competency.
- The demand for lithium would be dominated by the electronic vehicle industry over the next ten years, and EV industry would seize over three-quarters of the ultralight battery metal’s consumption by the end of 2030, as per the Chilean state mining agency, Cochilco.
- ASX-listed lithium mining companies such as GXY and PLS have experienced weak demand throughout the global lithium value chain, and further impact of COVID-19 pandemic wave on sales remained uncertain.
- Another ASX player, AJM witnessed June as a record quarter with lithium concentrate sales and shipment of 60,950 wmt (58,208 dry metric tonnes). Moreover, the Company inked five-year Binding Offtake Agreement with Hunan Yongshan Lithium Co., Ltd owned by Ningbo Shanshan Co., Ltd.
In recent years, electric vehicle (EV) witnessed a rapid evolution with ongoing developments in the automotive sector, globally. Moreover, the growing popularity of EV and the battery technology in automotive space is exemplified by the soaring price of Tesla, Inc. (NASDAQ: TSLA), which has been enjoying an overriding interest in the market with a potential for revolutionary battery technology.
Lately, the electric automaker became the most valuable car company as Tesla’s shares crossed US$1000 mark for the first time. Tesla stock quoted US$447.37 on 2 September 2020, decreasing by 5.83% from its previous close.
Furthermore, owing to the challenging environment circumstances, the search has risen for replacing the automobiles that have been using fossil fuels (causing ecological disruption). Also, the alternatives which are believed to emit zero or lower environmental emission would transform automobile mobility into a more sustainable model.
At this juncture, numerous automotive manufacturers are preparing themselves to bring forward a diverse range of sustainable product to the consumers.
As per the Chilean state mining agency, Cochilco, the demand for lithium would be dominated by the electronic vehicle industry over the next ten years. Furthermore, it is noted that EV industry would seize over three-quarters of the ultralight battery metal’s consumption by the end of 2030.
While the excitement around electronic vehicles has grown manifold, let us quickly skim through some ASX listed lithium stocks.
Galaxy Resources Limited (ASX:GXY)
Galaxy Resources Limited is a global company with lithium production facilities, brine assets and hard rock mines.
For the first six months ended 30 June 2020 (1H FY20), GXY’s lithium concentrates production volume (Mt Cattlin) stood at 45,248 dry metric tonnes (dmt), which surpassed the production guidance of 40,000 – 45,000 dmt. During 1H FY20, 58,541 dmt of lithium concentrate was shipped from the Esperance Port.
Notably, the lithium market has been experiencing weak demand throughout the lithium value chain, and the impact of COVID-19 pandemic wave on sales remained undecided.
During 1H FY20, GXY’s loss from operations at Mt Cattlin (before impairment and write-downs) was US$405,000. The loss was ascribed to high costs of production, lower sales volumes, and reduced spodumene pricing of US$398/dmt in comparison with the prior period.
GXY’s operating cash outflows for 1H FY20 stood at US$17,016,000, demonstrating an upturn of US$62,450,000 (pcp).
During the trading session on 3 September 2020, Galaxy Resources share price was at $1.4 per share, with a decrease of 3.448% (at AEST 2:04 PM). GXY delivered a return of 84.71% during the period of last three months to shareholders.
Pilbara Minerals Limited (ASX:PLS)
Pilbara Minerals Limited is an Australian producer of lithium and tantalum. The Company operates 100% owned Pilgangoora Li/Ta project located in Pilbara, Western Australia, which further positions the Company to become a major player in the rapidly growing global lithium supply chain, reinforced by the EV and energy storage markets.
The Company in the full-year financial report stated that its FY20 results mirrored weak market conditions in China, softer customer demand for lithium raw materials and less spodumene concentrate prices.
Furthermore, PLS responded to the challenges with the placement of a production moderation strategy, which proved to be extremely effective under the difficult situations across the lithium market, worldwide.
Notably, PLS delivered on this strategy on numerous fronts: the combination of moderated production and enhanced lithia recoveries facilitated diminished operating costs.
Also, AU$111.5 million equity raising boosted its balance sheet and well-positioned the Company to weather the coronavirus storm; and of late, refinancing of senior debt is believed to decrease its funding costs and advance financing cash flows.
Moreover, following the end of FY20, the Company also entered into a binding credit-approved commitment with BNP Paribas and CEFC on 30 July for a US$110 million senior secured debt facility primarily to repay the balance of Nordic Bond facility, diminish funding costs and advance financing cashflows.
During the trading session on 3 September 2020, Pilbara shares were trading at AU$0.362 per share, with an increase of 1.972% (at AEST 2:21 PM). PLS delivered a return of 36.54% during the period of past three months to shareholders.
Altura Mining Limited (ASX:AJM)
A key player in the global lithium market, Altura is leveraging burgeoning demand for raw materials essential for manufacturing lithium-ion batteries for electric vehicles as well as static storage uses.
During the quarter ended 30 June 2020, the Company recorded its fifth consecutive quarter of commercial production, with lithium concentrate production of 46,316 wet metric tonnes (wmt) versus 42,282 wmt during the quarter ended 31 March 2020.
In the 2019/20 financial year, the Company’s lithium concentrate production totalled 181,264 wmt, representing 82% of nameplate capacity.
Notably, Altura experienced June as a record quarter with sales and shipment of 60,950 wmt (58,208 dry metric tonnes or dmt) as compared to 24,500 wmt / 22,564 dmt in the March quarter.
Source: ASX update, dated 31 July 2020
Furthermore, The Company secured both a contract for 2020 and a five-year Binding Offtake Agreement with Hunan Yongshan Lithium Co., Ltd owned by parent company Ningbo Shanshan Co., Ltd (one of the biggest stakeholders of AJM)
The binding offtake agreement, which is noted to commence in January 2020 comprises of options to agree with inflated supply to 120,000 dmt annually. Additionally, single-year contract encompasses the supply of 44,000 dmt in 2020 to furnish feedstock for plant commissioning as well as ramp up.
Altura last traded on 7 August 2020, at a price of AU$ 0.070. On 12 August, Altura Mining via ASX announced about its suspension from quotation under listing rule 17.2, pending the release of a notification with regards to shifts to its existing financing arrangements.
On 18 August, as per the Company’s request an extension to the voluntary suspension was granted until 25 August 2020.