Galaxy Resources has disclosed a $US284 million ($A430 million) loss for the 2019 financial year, driven by lower lithium prices and non-cash write-downs and impairment at its Mt Cattlin mine near Ravensthorpe.
Galaxy Resources has disclosed a $US284 million ($A430 million) loss for the 2019 financial year, driven by lower lithium prices and non-cash write-downs and impairment at its Mt Cattlin mine near Ravensthorpe.
Shares in the company were up 3.6 per cent despite the news, to trade at $1.07 at 3:05pm AEDT.
Galaxy cited challenging market conditions in the lithium sector, due to lower-than-expected demand in China and the oversupply of lithium concentrate in the market, had also affected the group’s sales volumes and earnings.
The company posted earnings before interest, tax, depreciation and amortisation (EBITDA) of $6.8 million, excluding a $23.6 million write-down at Mt Cattlin mid-last year, where the company also cut back its operations in November to help reduce costs.
EBITDA was down from $281.2 million in FY18, which included a $US217.2 million gain arising from the sale of Galaxy’s Salar del Hombre Muerto tenements in Argentina to South Korean steelmaker POSCO in August 2018.
Galaxy now has three projects, including the Sal de Vida lithium brine deposit in Argentina and the James Bay pegmatite project in Canada.
The Mt Cattlin project in Western Australia is located about two kilometres north of Ravensthorpe.
Galaxy chief executive Simon Hay said the company had performed well in areas within its control.
He said the major contributor to the company’s net loss of $430 million was predominantly due to lower lithium prices.
“(This) necessitated the write down of inventory, impairment of Mt Cattlin property plant and equipment carrying values and derecognition of deferred tax asset leading to a combined negative impact of $US245.9 million ($A372 million),” Mr Hay said.
The company’s cash balance remained strong, he said, noting $US143.2 million ($A217 million) at December 31, with nil debt.
“In addition, we hold inventory of 65,000 tonnes of final product spodumene concentrate and aim to monetise this across 2020.”
Mr Hay acknowledged the impact of the coronavirus on Galaxy’s customer base in China, citing customers were not in a position to complete purchases due to constraints on their businesses.
“The situation is fluid and therefore Galaxy will not be providing sales forecasts until some clarity returns to our customers and the market in general.”
He concluded Galaxy was well positioned to invest in the Sal de Vida project, on the back of successful operations at Mt Cattlin combined with a robust balance sheet.
In FY19, Mt Cattlin produced record volumes of 191,570 dry metric tonnes, compared with the 156,689dmt reported a year earlier, at a cost of $US391/dmt.
Galaxy sold 132,687dmt in FY19, down from $159,255dmt.