Eye on Lithium: Allkem rakes in the dough, says spodumene prices will increase in Sept quarter
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All your ASX lithium news for Tuesday, July 19
Lithium miners are raking in the cash lately despite Goldman Sachs’ bear call.
Chinese battery makers are still willing to pay upwards of US$70,000/t to get chemicals for electric vehicles in a tight market.
Last week Pilbara Minerals (ASX:PLS) raked in US$6188/dmt for a 5.5% Li2O cargo of spodumene in its latest auction – down from the US$7017/t 6% price received in a pre-auction bid last month – but still extraordinary given the first auction last July garnered a price of just US$1250/dmt.
And today, notwithstanding some operational issues with grades, Covid, recoveries and stripping ratios at its Mt Cattlin spodumene mine, Allkem (ASX:AKE) says it produced a record 193,563t of spodumene concentrate in FY22.
That included just 24,845t in the June quarter (37,8437dmt of shipments), but still generated record revenue of US$188.9m with a remarkable gross margin of 84% on average pricing of US$4992/dmt for spodumene at a grade of 5.4%.
As Stockhead’s Josh Chiat points out, that price is remarkable because it’s well over double the US$2178/dmt Allkem pulled in the March quarter.
Plus, at 5.4% it is well below the benchmark 6% Li2O grade normally referenced in spot pricing and revenue significantly outstripped the previous quarter’s US$143.8m on much weaker production.
The company says it expects to see relatively stable prices in lithium chemicals, carbonates and hydroxide and a continued increase in spodumene prices for the September quarter.
And they’re not alone in that prediction.
#lithium rising in price due to undersupply. The structural deficit is starting to show cracks. Not enough new projects coming online and current producers are unable to simply flick a switch that says ” double production”. Producers & near term prod benefit. https://t.co/NqT0Oa114k
— Lithium Guy (@lithium_guy) July 18, 2022
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A total of 68 stocks were in the green today, 41 were flat and 22 were red.
The company has agreed to terms with JV partner Ganfeng Lithium on an expandable US$40 million debt facility for the Goulamina Lithium Project.
LLL says the completion of the facility agreement places it in the robust position of having sufficient funds to cover its share of the Stage 1 development capital costs for the project – which are currently estimated at US$255 million.
Plus, it completes the company’s initial offtake marketing efforts and secures Ganfeng 100% of the spodumene product offtake from Stage 1 of the Project.
“The finalisation of the debt funding package from Ganfeng significantly de-risks development and means we are now able to fully focus on accelerating development work on the Goulamina Project as we jointly bring Goulamina into production,” MD Simon Hay said.
Galan has appointed Ausenco as the Environmental Impact Assessment (EIA) consultant for its Hombre Muerto West Lithium Project in Catamarca Province, Argentina.
If you don’t speak Spanish that translates as Dead Man West but probably has nothing to do with a real dead man. We hope.
Anyway, the EIA is part of the Definitive Feasibility Study (DFS) and should kick off in around two weeks.
MD Juan Pablo Vargas de la Vega says Ausenco’s record and professional standing within the mining industry is second to none and “they will be ably supported by their local Argentinian representatives who have a strong working knowledge of the Catamarca environs.”
At Stockhead we tell it like it is. While Galan Lithium is a Stockhead advertiser, it did not sponsor this article.