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Mining
There is no shortage of lithium companies facing ramp-up challenges at all ends of the market, from spodumene through to downstream chemicals.
It’s all served as a reminder to those expecting a flood of new lithium products to hit the market that suppliers always face challenges as they enter production, with recoveries rarely matching study expectations.
The latest new miner in the market, Core Lithium (ASX:CXO), entered a trading halt for a capital raising today, less than a year after raking in $100 million in fresh equity to support the completion of its Finniss lithium mine near Darwin.
The project shipped its first spodumene concentrate in the June quarter, producing 3589t and 14,685t in March and June respectively at recoveries of 47.4% and 48.6%.
That paled in comparison to average lithia recoveries in a 2021 DFS of 71.7%.
C1 costs fell from $2188/t to $902/t in the June quarter, but Core disappointed the market with FY24 and FY25 guidance far softer than expected and well below the nameplate 175,000tpa capacity outlined in its initial study work.
CXO expects to sell 90,000-100,000t of Li2O concentrate in FY24 at C1 costs of $1165-1250/t, with $45-50m also set aside for early works on the BP33 underground mine, the next deposit expected to be mined by Core after its initial Grants open pit.
Process plant constraints and an ore supply gap mean FY25 production is likely to be softer again.
Talking to media at the recent Diggers and Dealers forum in Kalgoorlie, Core MD Gareth Manderson said ‘speed to market’ in a currently strong spodumene pricing environment was a trade off for the teething problems the miner was seeing.
“It’s an emerging industry. Where there’s developing capability and capacity and so you know, that’s one of the things I think is an advantage for Core is to start early, start quickly, and resolve those issues at a small scale and build from there,” he said at the time.
“For us, probably the fines and the recovery have been the biggest issue and then there’s a little bit around understanding the mine and some of the geotech in the mine.
“But the other side of that is to become a miner in under two years, and produce concentrate in under two years. So you know, I think the speed to market in a reasonable pricing environment is a reasonable offset for working through some of these issues.”
Honeymooners tend to enjoy their fair share of cake, but it’s the yellow variety shining at Boss Energy’s (ASX:BOE) Honeymoon project.
The South Australian uranium hopeful says it has an eye to improving both mine life and production rates out of the restarted mine, where confirmatory drill results from within the Gould’s Dam resource came in above expectations for both grade and thickness.
They included a hit of 5.25m at 3744ppm U3O8 from 102.5m in hole WRM0013, 2.75m at 3693ppm from 113.25m in hole WRM0020 and 4.25m at 1094ppm U3O8 from 121m in hole WRM0007.
Boss, which says it has boosted resources at Honeymoon by 433% to 71.67Mlb since 2015, is planning to punch another 40 holes into Gould’s Dam, with resource infill drilling then to move to the satellite Jason’s deposit.
“These strong drilling results are in line with our strategy to increase the inventory at Honeymoon. This will in turn enable us to grow the mine life and production rate, increasing cashflow and leveraging our existing infrastructure,” Boss MD Duncan Craib said.
“The results from new drill holes within the resource surpass our expectations in both grade and thickness of the mineralisation. This is demonstrated by the exceptional results from WRM0013 including 5.25m width @ 3,744ppm pU3O8 (19,658 GT).
“To put it into perspective, our cut-off grade is 250ppm and while we could mine at lower grades, there are numerous cost and operational benefits to leaching higher grade material from continuous thicknesses.
“Primarily, less ore has to be leached to extract the same amount of contained uranium, which typically results in lower operating costs and increased operating margins.”
$1.2 billion capped Boss was off today, but is up over 60% since the start of the year and almost 10% over the past month.
Craib told delegates and Stockhead’s Reuben Adams at the Diggers and Dealers Mining Forum in Kalgoorlie last week the company was being ‘inundated with offers’ for its offtake, saying the uranium price “has to go up”.
“I haven’t [previously been calling the bull market], and we are quite conservative in our outlook,” Craib told Stockhead.
“So for us to come out and say that means something.”
READ: ‘Inundated with offers’: Conservative Boss calls imminent uranium bull market
Success stories were few and far between among the ASX’s large cap miners, with a terrible morning for the big iron ore stocks cutting the materials sector down to size on a 2.02% drop.
The culprit was some bearish data out of China on property investment, with new construction now down 24.5% in 2023 so far.
Fixed asset investment growth also missed forecasts at 3.4% for July.
“In seasonally adjusted terms, China’s industrial output rose by 0.01%/mth in July – marking the lowest increase since April,” Commbank mining analyst Vivek Dhar said.
“Daily output growth in China’s downstream sectors (i.e. automobiles, micro‑computers and mobile phones) fared worse in month‑on‑month terms than upstream sectors (i.e. cement, steel, coal, natural gas and oil) in July.
“China’s FAI contracted in July at the same pace as June (‑0.02%/mth in seasonally adjusted terms). China’s FAI has now contracted for five of the last seven months, exacerbating policymaker concerns that China’s economic recovery will falter given the headwinds from investment growth.”
That saw copper, nickel and zinc all fall more than 1%, with nickel plunging 1.6% to US$19,780/t on the LME, dropping below US$20,000/t for the first time this year.
A handful of lithium miners were in the green on the back of a flurry of M & A activity in the sector. Azure Minerals (ASX:AZS) rose 2.8% on its second trading day since revealing a rejected $2.31 per share approach from major shareholder SQM.
Delta Lithium (ASX:DLI) shares rose 4.32% after a major share crossing, rumoured to be from Chris Ellison’s MinRes (ASX:MIN), sent the share price flying yesterday.
Among the large caps Pilbara Minerals (ASX:PLS) and Liontown Resources (ASX:LTR) were also in the green.
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