Resources companies suspend operations

Lynas Corporation and Galaxy Resources have suspended operations in response to tighter overseas government controls, while explorer Whitebark Energy has also felt the impacts of COVID-19.

Lynas today announced the temporary shutdown of its rare earth processing plant in Malaysia until the end of the month, in response to the nation’s government announcing tighter controls and an escalation in COVID-19 cases.

Lynas shares fell by more than 14 per cent on the news to trade at $1.10 today.

The announcement comes nearly a month after the company received a three-year licence renewal from the Malaysian government to operate the plant.

Lynas is the largest producer of rare earth elements outside of China, with a deposit in Western Australia.

Its Mt Weld operations in WA will continue despite delays in processing at the Malaysia facility.

The company said it had retained some inventory to allow for a quick ramp-up upon restart.

“We have taken actions to significantly reduce cash outgoings during the temporary shutdown,” Lynas said.

It will continue to pay staff during the shutdown.

“We commence the temporary shutdown in a strong cash position and we are able to avoid a significantly majority of our costs under this shutdown scenario,” it said.

Lynas’s cash balance as at December 31 stood at $111.8 million.

The company expects positive cash flow from operations during the March quarter, prior to its $14 million payment in relation to the Permanent Disposal Facility, announced earlier this year.

Galaxy Resources told the market today it would demobilise the majority of its workforce at the Sal de Vida lithium deposit in Argentina.

A skeleton crew will remain at the site for essential services, Galaxy says.

It comes after the Argentinian government issued a nationwide lockdown to contain the spread of COVID-19.

“The restrictions will inevitably slow down onsite activities, however offside engineering design work will continue unaffected,” Galaxy said.

Oil explorer Whitebark Energy has announced its executive management team, including managing director David Messina, would each receive a 50 per cent cut to their remuneration from April 15.

Permanent and contract employees have also agreed to pay cuts for the time being, Whitebark said.

Its shares also plunged today, down 25 per cent to 0.3 cents per share at 10:10am AEDT.

The company recently delayed operations at the Rex-4 well, part of its Wizard Lake joint venture project in Canada, until the second quarter of 2020.

Whitebark today said the timing of the next well could be accelerated or delayed, depending on economic circumstances.