Eye on Lithium: US giant Albemarle posts a loss for Q4 but plans to double capacity by 2025
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All your ASX lithium news for Friday, February 18.
US miner Albemarle (NYSE:ALB) had a rough week, after reporting a fourth quarter loss DESPITE soaring lithium prices.
The company posted a $3.8 million loss in Q4, compared with a $84.6 million profit in the previous corresponding quarter, which it put down to a $132.4 million “post-measurement period acquisition purchase price adjustment related to anticipated cost overruns from supply chain, labour and COVID-19 pandemic related issues at the Kemerton construction project.”
The company said around 90% of production for lithium companies are locked into long-term contracts below the spot price – and reminded investors spot prices are more of an indication of where contract prices could head over time.
The problem with Lithium – the price you see is seldom the price you get. Chart shows Albermarle (-17% today on a big miss) vs China spot Lithium Carbonate rebased to zero over just 6 months. pic.twitter.com/nXBEhY2lMP
— David Finch (@DavidFi_) February 17, 2022
Albemarle expects its sales volume to grow by 20-30% as it doubles capacity to about 200,000mt/year by 2025.
First commercial sales from its La Negra operations in Chile are expected in the second quarter, along with the start-up of its Kemerton complex in WA in the second half of the year.
The near term producer reported broad high-grade intersections at its Finniss project in the NT, with two diamond drill holes at BP33 returning 57.35m at 1.83% Li2O and 51m at 1.63% Li2O.
The company the continuity in grade and thickness displayed, together with the position of the intersections outside or on the boundary of the current mineral resource envelope, is expected to result in an increase in the mineral resource estimate for BP33.
Core MD Stephen Biggins said the goal is to deliver first production from Finniss this year.
“Our prime directive is to deliver first production of high-quality lithium concentrate from the Finniss Project this year in the midst of a very high lithium price and high operating margin environment,” he said.
“These new world-class lithium drilling results reflect the confidence Core has in delivering significant resource growth from the Finniss Project that will add to our life of mine and our capacity to materially increase lithium production from northern Australia in the future to keep up with rapidly growing global demand.”
Expanded exploration and resource drilling will recommence and ramp-up in early Q2 2022 across the project.
The company released its December quarterly today, which flagged new 13 hole diamond drilling program underway at the Cade and Davy deposits, along with “advancements towards development” at its Pioneer Dome lithium project in WA.
A baseline environmental survey was also completed, and a scoping study is expected to kick off mid-year.
The company said this further prepares Dome North for development – the deposit has a defined mineral resource of 11.2Mt at 1.21% Li2O.
Post quarter end ESS received $375,000 in cash and 34 million fully paid ordinary listed shares from Critical Resources (ASX:CRR), completing its divestment of the Mavis Lake project.