Tech Metals: A crucial refinancing deal could carry Altura through lithium’s darkest days
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WA lithium producer Altura Mining (ASX:AJM) is “in the final stages” of locking in a big financial package that will keep the lights on amid worsening market conditions.
The price for lithium products continued to decline in January, with the Benchmark Lithium Index falling to its lowest point in three years.
Following a 36 per cent drop in 2019, price for spodumene concentrate fell another 2.6 per cent in January to an average of $468/ tonne (FOB Australia) as Chinese converters continued to feel the strain of low chemical prices, Benchmark Mineral Intelligence reported.
Everyone is in struggle town. Other Australian spodumene producers have presented a ‘bearish’ outlook for the first half of 2020 in the latest round of earnings calls, with both Pilbara Minerals (ASX:PLS) and Galaxy Resources (ASX:GXY) continuing to lower output in response to price pressures.
Altura, which only achieved commercial production in March 2019, is not yet operating profitably.
And it needs to refinance a loan note facility by August 2020, which had an outstanding principal amount of $US142.9m ($212.8m) as of September 30, to continue as a going concern.
Today, Altura says it executed a term sheet with current lenders to extend the existing loan facility for an additional three years on “favourable terms”.
These “favourable terms” aren’t specified, but Altura managing director James Brown said the financial package would position it to navigate its way through upcoming years.
“The extension of the existing loan facility shows tremendous support by our lenders, who have been with us since the commencement of the development of this project,” he says.
“This transaction also signifies a positive funding outcome in the global lithium sector.
“This combined package gives us significant balance sheet strength to navigate the current lithium market.
“Fortunately, our operations continue to perform strongly with solid production and highly marketable product grade.
“We’ve brought our costs down to globally-competitive levels and will continue to drive them lower. This coupled with our strong offtake partnerships are ensuring regular sales and shipments.”
Altura is also undertaking an equity capital raising to further strengthen its balance sheet.
The company – which has been in a trading halt since the start of January – expects to finalise the debt and equity agreements before the end of February.
Lithium Australia (ASX:LIT) subsidiary VSPC will participate in a government-funded program to develop fast-charge lithium-ion batteries for new generation trams. The $5m program also includes the CSIRO, University of Queensland and Chinese battery maker Soluna.
VSPC executive director Mike Vaisey says this project brings together Australia’s technological capabilities – including VSPC’s advanced cathode materials, CSIRO’s battery expertise and UQ’s analytical abilities – to develop new battery systems using VSPC cathode material.
“Light rail is experiencing a resurgence worldwide as cities modernise, and fast charge batteries are critical to avoiding the poles and wires of the past,” he says.
Soluna will advise on manufacturing, and also lead commercialisation of the fast-charge battery products.