Lithium miner Alita collapses

Alita Resources has entered administration just two days after its biggest shareholder, Galaxy Resources, struck a deal to buy the company’s $42 million in secured debt.

KordaMentha was appointed administrators for Alita, which has run into financial difficulties caused by the slowdown in the lithium market and fall in lithium prices.

Additionally, its sole offtake partner, Jiangxi Special Electric Motor, has reneged on shipments.

Richard Tucker and John Bumbak were appointed administrators.

In a statement, KordaMentha said it would meet with key stakeholders immediately.

“The administrators are currently making an urgent assessment of Alita's financial position and will be meeting with key stakeholders to discuss plans to reduce the ongoing monthly cash burn at the operations,” it said.

On July 25, Alita Resources said it did not ship any spodumene concentrate from its Bald Hill lithium and tantalum mine in June, and was also yet to do so in July, which led to a build-up of over 40,000 wet metric tonnes of inventory.

As a result, the company’s cash balance was at $16.6 million, moving closer to the minimum $5 million cash balance it required under the terms of its $42 million loan facility

The Bald Hill mine is located 50 kilometres south-east of Kambalda, and entered production in May last year.

It has production capacity of 155,000 tonnes per annum.

Alita is the merged entity between former joint venture partners in Bald Hill, Tawana Resources and Singapore-based Alliance Minerals Assets.

Alita’s news comes less than a week after Pilbara Minerals scaled back its Pilgangoora lithium project after it could not find a buyer to purchase a minority stake in the project.

As well as purchasing Alita’s secured debt, Galaxy has a 12 per cent stake in the company.

The Bald Hill mine is located only 75 kilometres from Galaxy’s Mt Cattlin mine.

Shares in Alita last traded on the ASX at 8.2 cents each.