Ambitious miner and producer of boron and lithium carbonate, 5E Advanced Materials Inc [ASX:5EA] saw its share price slip by 3% when it announced its latest results for production and earnings in the second of the financial year 20203.
The company said that its pre-commissioning activities for its small-scale facility have begun and are continuing to explore funding options as its activities eat away at its balance sheet.
5EA has been in the hot seat in terms of share value, both long and short term, with its share price falling 58% in the last full year and more than 8% in the past month alone.
It’s tracking far below the S&P average by 60%, as calculated in the last 12 months.
5EA remains steadfast for growth
5EA’s small-scale facility pre-commissioning activities kicked off before the end of the quarter, and operations are expected to commence either late in the first quarter or early in the second quarter of 2023.
The company hopes to keep to its initial target of reaching lithium carbonate production by 2Q 2023. However, this all depends on the company receiving final clearance from the Environmental Protection Agency to commence mining under the necessary permit.
5E provided a vague timeline, saying that it expects the permit to be issued ‘in the ordinary course of business’.
For the quarter ending 31 December 2022, 5EA advanced construction of its small-scale facility, with pre-commissioning activities underway.
Based on what the company learned from ramping up its small-scale facility, the company is also continuing to look at ways in which it can accelerate commercial production.
5E itself says, ‘the sooner the Company can enter commercial production, the sooner the Company can achieve positive earnings and cash flow’.
The company, fixed on this goal, has been spurred on by recent market speculation, stated:
‘There have been significant increases in prices for boron and lithium over recent quarters, largely driven by supply constraints which appear unlikely to dissipate in the near term. The Company’s independent market research indicates medium-to-long term strength in boric acid demand and pricing, which further reinforces the need to explore all options to accelerate commercial production.’
The minerals group anticipates optimising model estimates for capital cost, operating expenses and revenue, with the need to use data and flow sheets from the small-scale facility before it can create a larger-scale production strategy.
The company hopes to switch quickly to engineering and long-lead acquisitions to support commercial production timelines and is looking at initiatives to deliver revenue prior to operations.
One of these initiatives includes a signed letter of intent with Estes Energetics, a current supplier to the US Department of Defense, in collaboration to produce boron-based materials for solid rocket motors.
5A hinted at talks with other interested customers for boric acid and lithium carbonate offtakes and said it will pursue government funding initiatives in the US.
The company took a net income loss of $14,863 compared with $11,039 at the same time last year, and project expenses increased 14% in the quarter as plugging and abandonment costs exceeded cost reductions related to its water monitoring well.
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