MinRes has trimmed unit costs in an impressive update from its lithium business
\nChris Ellison\u2019s company will back a joint bid for Azure Minerals from SQM and Gina Rinehart
\nSayona trims costs in bid to keep North American Lithium alive, while Canadian neighbour Patriot is flying after announcing Ken Brinsden will become CEO<\/p>\n
Chris Ellison\u2019s Mineral Resources (ASX:MIN)<\/a> has sent lithium bag holders\u2019 hearts a-flutter, saying its Wodgina, Mt Marion and Bald Hill mines ALL remain profitable at current lithium prices.<\/p>\n This could be a double-edged sword of course. Wodgina was one of the mines shut in the last lithium downturn, chiselling out a vacuum of supply that went a long way to fuelling the extraordinary boom in prices seen from late 2021 to early 2023.<\/p>\n But despite scale backs at marginal junior and developer mines like Core Lithium (ASX:CXO) <\/a>and Liontown (ASX:LTR)<\/a>, major producers have shown little sign of slowing.<\/p>\n Instead their focus has shifted to costs to see if their operations can ride out the cycles.<\/p>\n Oversupply has led to crumbling lithium prices, with both chemical and concentrate pricing down over 80% in the past year.<\/p>\n Pilbara Minerals (ASX:PLS)<\/a> yesterday flagged a dividend pause and capex savings, but kept the pedal to the metal on expansions to 1Mtpa at its Pilgangoora mine.<\/p>\n Jarden\u2019s Ben Lyons said it was pulling a 27% cash margin even at current lithium prices of ~US$900\/t.<\/p>\n \u201cThe disclosure is supportive of our long-held view that Pilgangoora is capable of becoming embedded in the second quartile of the cost curve. Further, Pilgangoora is free of any joint venture complications or vested interests that may impact assets that are located even lower on the cost curve,\u201d he said.<\/p>\n MinRes shipped 86,000t from the Mt Marion JV with Ganfeng (60,000t at a 6% grade), up 34% QoQ (52% QoQ on a 6% basis), pulling in prices of US$738\/dmt on a 4.2% Li2O basis (US$1060\/dmt SC6).<\/p>\n But with pre-stripping ending 130 people will be redeployed to other MinRes sites, with costs for the first half coming in at $548\/dmt ($844\/dmt SC6), well below its guidance of $1150-1250\/dmt, with costs projected to fall to $500\/dmt by July.<\/p>\n At the 50-50 Wodgina JV with Albemarle, it shipped 142,000t of spodumene on a 100% basis, up 129% QoQ and 49% YoY, with production up 2% QoQ and 26% YoY to 115,000t, with 6474t of toll treated battery chemicals sold at prices of US$18,712\/t.<\/p>\n MinRes says costs in the first half were sitting at $845\/dmt on a product basis and $875\/dmt on an SC6 basis, at the lower end of its $875-950\/dmt guidance, with FOB costs expected to fall to $550\/dmt by September.<\/p>\n MIN\u2019s share of shipments came in at 63,000t, though its ownership of the mine shifted from 40% to 50% in October with the closure of a restructure with Albemarle which netted the company ~$600m.<\/p>\n MinRes\u2019 Pilbara and Yilgarn iron ore mines shipped 4.8Mt, up 23% QoQ but slightly below analysts expectations after wall failure at its Iron Valley operations in the north.<\/p>\n But at US$119\/dmt, its price realisations were strong at 93% of the Platts index, set against costs of $109\/wmt in the Yilgarn and $74\/wmt in the Pilbara.<\/p>\n \u00a0<\/p>\n <\/span><\/p>\n \u00a0<\/p>\n <\/span><\/p>\n \u00a0<\/p>\n Meanwhile MinRes, which spent an estimated $840 million on stakes in Bald Hill and junior lithium explorers in just five months last year according to Jarden, has revealed it intends to sell into a $3.70\/sh offer from SQM and Gina Rinehart\u2019s Hancock Prospecting.<\/p>\n Netting MinRes around $250m, it clears a major obstacle for the scheme arrangement, with other bid dogs Mark Creasy and Wilhelm Zours also supporting the offer.<\/p>\n The $1.7 billion takeover would give Chile\u2019s SQM and Hancock each a 30% stake in the Andover discovery. Azure holds 60% with the Creasy Group controlling the other 40%.<\/p>\n It is viewed as the next major pegmatite discovery in the Pilbara, the world\u2019s richest lithium domain, with a maiden resource due this year.<\/p>\n MinRes had built a stake of 13.56% after Rinehart picked up over 18% in response to a $3.52 a share bid from SQM last year. Coming shortly after Hancock\u2019s interjection in Liontown killed a $6.6b offer from Albemarle, the blockage of the register with major holders led Ellison to say last year SQM\u2019s offer was \u2018dead in the water\u2019.<\/p>\n But the return of SQM with Hancock as ally rather than foe has shifted the needle.<\/p>\n Azure shares fell 3.8% this morning as hopes of a competing bid or purchases above the $3.70 offer price faded.<\/p>\n MinRes stock lifted 5.3% on its strong numbers.<\/p>\n \u00a0<\/p>\n Meanwhile, Ellison indicated its strategy in the Goldfields would be to create a fourth processing plant for the company in the region where it can haul and co-develop deposits with juniors it has amassed stakes in as part of a massive land banking exercise.<\/p>\n \u201cWe expect that we\u2019ll be able to go and talk to some of the junior companies and we\u2019ll be able to haul to our plant and be able to come up with some sort of arrangement whether it be a JV or a mine gate sale,\u201d Ellison said today.<\/p>\n \u201cIf you have a look over history, whether it be with copper or with gold or iron ore, most of the larger companies that were successful were able to accumulate substantial high quality land into their portfolio and then they could progressively unfold that and grow mining operations.<\/p>\n \u201cEarly days at the moment, but give me another 12 months and I think it\u2019ll be very clear what we\u2019re putting together.\u201d<\/p>\n MinRes is a big shareholder in Delta Lithium (ASX:DLI),<\/a> owner of the Mt Ida deposit, Global Lithium (ASX:GL1)<\/a>, owner of Manna, Develop (ASX:DVP)<\/a>, which owns the Pioneer Dome project and is constructing a $46m underground decline for MinRes at Mt Marion, newly listed Kali Metals (ASX:KM1)<\/a>, and lithium rights deals at nearby gold mines.<\/p>\n There is also no suggestion of a pullback in spending on a fourth processing train at Wodgina, with Ellison saying it is expected to start building in the middle of the year and take 18-20 months to construct.<\/p>\n RBC\u2019s Kaan Peker said it appeared that MinRes\u2019s lithium assets had turned a corner operationally, with low unit costs a standout.<\/p>\n \u201cA better than expected 2Q result, with another strong operational performance from the lithium assets (Wodgina, Mt Marion and Bald Hill), higher than forecast Mining services volumes and Iron ore sales and pricing,\u201d he said in a note.<\/p>\n \u201cSpecifically for lithium, the continued improvement in production and sales volumes, and unit-cost performance was a standout, and reinforces our view that operationally both Mt Marion and Wodgina have turned the corner, which should drive EBITDA margin expansion and growth.\u201d<\/p>\n READ: MinRes wants control of the rock as it launches lithium expansion plans<\/a><\/p>\n \u00a0<\/p>\n But other producers are certainly feeling the pinch.<\/p>\n The latest example comes from Canada\u2019s only operating spodumene mine North American Lithium, where Sayona Mining (ASX:SYA)<\/a> has cut 14 staff and replaced its Canadian CEO Guy Belleau with its COO for Quebec Sylvain Collard and 14 staff have been made redundant.<\/p>\n \u201cWhile regrettable, these personnel changes are well targeted to ensure that Sayona has the right mix of experience and expertise to deliver key outcomes for shareholders,\u201d interim CEO James Brown said. <\/p>\n \u201cWe are confident we now have the right team in place in Qu\u00e9bec to maintain and enhance production, while enabling enhanced productivity to ensure our continued growth as a leading force in North America\u2019s electrification.\u201d<\/p>\n Brown said the company was focused on reducing its cost base at NAL, which went bust under previous owners in the last downturn.<\/p>\n \u201c\u201cAs the only operating hard rock lithium mine in North America, NAL is well positioned to remain a strategic source of lithium for the North American battery and EV market,\u201d Brown said.<\/p>\n \u201cWhile current market conditions are challenging, we are confident that the long-term outlook for lithium remains positive as the energy transition gains momentum and the shift to an electrified world continues.\u201d <\/p>\n The full outcome of Sayona\u2019s review are expected at the end of the March quarter, with its production outcomes for the 75-25 JV with Piedmont Lithium (ASX:PLL) in the December quarter yet to be released.<\/p>\n It made $96m in revenue after producing 31,486\/dmt in the September quarter and selling 48,211dmt of concentrate at operating costs of $1231\/dmt and average realised selling prices of $1985\/dmt.<\/p>\n It had expected to produce 140,000-160,000dmt at a 5.4% Li2O product grade in the 2024 financial year, selling 160,000-180,000t at the same spec. But prices have fallen precipitously over the past four months.<\/p>\n In better news for fans of Canuck lithium, Patriot Battery Metals (ASX:PMT)<\/a> shares charged 12.2% higher on news non-executive chairman Ken Brinsden would move from Perth to Quebec to take on the role of CEO and President.<\/p>\n The seachange will mark the return to the head of a significant lithium company for Brinsden, who made way for Dale Henderson in 2022 after leading Pilbara Minerals (ASX:PLS) <\/a>through the collapse in lithium prices in 2018-2020.<\/p>\n It included the purchase of collapsed neighbour Altura Mining, which set the company up to emerge as one of the world\u2019s biggest and most profitable lithium producers as EV sales surged in recent years.<\/p>\n Dual-listed PMT, which has a market cap of ~C$980m and last year received a C$109m investment from Albemarle, boasts the Corvette property in Canada\u2019s James Bay region, where its CV5 pegmatite has a resource of 109.2Mt at 1.42% Li2O and 160ppm tantalum pentoxide.<\/p>\n The charismatic Brinsden is well known for his thoughts on the lithium market, including this fascinating presser at last year\u2019s Diggers and Dealers Mining Forum. <\/a><\/p>\n \u00a0<\/p>\n <\/span>\u00a0 The post Ground Breakers: Is that a whiff of lithium positivity we smell in the air? Oh wait, sorry Sayona<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Mineral Resources (ASX:MIN) share price today<\/h2>\n\n
Mineral Resources (ASX:MIN) share price today<\/h2>\n\n
MinRes to back Azure bid<\/h2>\n
Lithium growth plans still in train<\/h2>\n
All rosy then? Wait a minute<\/h2>\n
Sayona Mining (ASX:SYA) and Patriot Battery Metals (ASX:PMT) share prices today<\/h2>\n\n
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