Galaxy Resources has confirmed interest in striking a downstream processing deal with Alita Resources’ offtake partner, just a day after placing the lithium miner into receivership, while Talison is reconsidering the timing of its $516 million stage three expansion project at Greenbushes.
Galaxy Resources has confirmed interest in striking a downstream processing deal with Alita Resources’ offtake partner, just a day after placing the lithium miner into receivership, while Talison is reconsidering the timing of its $516 million stage three expansion project at Greenbushes.
On a conference call to present its half-year results, Galaxy Resources chief executive Simon Hay said the company had discussions with Alita’s management a day after it announced a deal to buy the company’s $42 million in secured debt.
“We engaged with Alita management on Wednesday and had what we thought were quite positive discussions,” he said.
“We presented a number of requirements and Alita management was very receptive to these discussions and accepting of all the points we raised.”
Mr Hay said those requirements included a standstill on the debt facility for another week to allow Galaxy to work with Alita to examine the business in detail and the options that were open to it.
“Without hearing back from Alita, the Alita board then called in the voluntary administrators yesterday,” he said.
“To protect our interests we appointed KPMG as receivers late yesterday.”
Galaxy is Alita’s largest shareholder with a 12 per cent stake in the company.
Alita’s sole offtake partner, Jiangxe Ganfeng Electric, sources its feed stock only from its Bald Hill mine, which is likely to be placed on care and maintenance.
Galaxy has previously expressed interest in downstream processing opportunities, and Mr Hay was queried as to whether that offtake agreement would interest the company.
“That’s an obvious opportunity we would want to look at,” he said.
The news around Alita came amidst Galaxy releasing its half-year results to June 30, which detailed a loss of $171.9 million, compared to an $11.5 million profit in the prior corresponding period.
It has around 59,000 tonnes of lithium concentrate stockpiled.
The weak results were largely as expected, after it flagged an impairment of up to $274 million at its Mt Cattlin mine earlier this month.
It comes as late yesterday Talison Lithium announced completion of its stage two expansion project, which will boost production capacity at the Greenbushes lithium mine to around 180,000 tonnes per annum of lithium concentrate.
However, a spokesperson for Talison said the stage three expansion, which will boost production by 608,000tpa, was currently halted.
“CGP3 construction activities are currently paused as Talison’s shareholders review the timing of construction and the need for additional volumes of spodumene concentrate to align with the converting capacity additions of the shareholders,” the spoksesperson said.
“Last week [19 August], Talison received state government environmental approval for the potential future expansion of Greenbushes, which includes the CGP3 project.
“We continue to work on receiving federal government approval, with a decision expected by the fourth quarter of 2019.
“Greenbushes remains a profitable and world-class hard-rock lithium mine with a long and proud history of operating safely and supporting the South West communities in which we operate.”
The stage three expansion was expected to create 650 construction jobs and 50 operational jobs.
Also today, Altura Mining answered an ASX price query as to why its shares had fallen.
The company blamed weak market conditions and “negative news emanating from some specific lithium companies”.
Shares in Galaxy closed down 2.1 per cent to trade at $1.16 each.