Large lithium producer Allkem [ASX:AKE] reported record quarterly revenue of US$150 million for lithium carbonate sales of 3,721 tonnes on a gross cash margin of 89%.
Group revenue for the quarter came in at US$298 million.
AKE said customer demand in the spodumene market ‘remains robust’ with spodumene concentrate pricing in the December quarter expected to be ‘in line’ with the September quarter.
Year to date, AKE shares are up 30%.
Source: tradingview.com
Allkem’s September Quarter
Allkem reported that production at its Olaroz Lithium Facility in Argentina was up 17% on the previous corresponding quarter, hitting 3,289 tonnes of lithium carbonate.
43% of that was battery-grade material.
As for lithium carbonate sales from Olaroz, AKE sold 3,721 tonnes. This yielded a record quarterly revenue of US$150 million with a gross cash margin of 89%.
Third-party sales for the September quarter averaged US$43,237 per tonne.
AKE expects this average price for lithium carbonate products to rise in Q2 FY23 to US$50,000, a 15% bump on the September quarter.
As for AKE’s Mt Cattlin operation, it produced 17,606 dry metric tonnes (dmt) of spodumene and shipped 21,215 dmt,
Mt Cattlin generated revenue of US$106.7 million, with a gross cash margin of 80% based on an average sales price of US$5,028/dmt.
Development updates
- Olaroz Stage 2 is now 93% complete. However, supply issues have been flagged and likely slow progress. Pre-commissioning is due to begin Q4 CY22, with commissioning slated for Q1 CY23 through to Q2 CY23. The first production ramp-up is scheduled for Q2 CY23.
- Olaroz Stage 2 is conducting a review of capital expenditure, considering delays, global inflation, and supply constraints. It’s likely to increase around 12% to US$425 million, excluding VAT, to be funded from operating cash flow.
- Naraha plant commissioning advances, production expected in the December quarter.
- Sal de Vida Stage 1 ponds are receiving brine infills, and two pond strings are 65% complete.
- The James Bay project has passed ESIA assessments and awaits final consultation around mid-November.
- Both Sal de Vida and James Bay experience continued cost pressure mirrored globally.
- A binding HOA has been signed for 100% Maria Victoria lithium tenements in Olaroz.
- The International Finance Corporation has agreed to support AKE’s financing of Sal de Vida with a US$200 million financing facility — this agreement is not yet binding.
AKE sees robust lithium demand
By the end of September, AKE’s net cash totalled US$447 million.
Allkem believes spodumene demand is ‘robust’ and concentrate pricing for the December quarter should match September’s quarter.
AKE states the average weighted price for third-party saleable lithium for Q2 FY23 could reach around US$50,000 a tonne — a 15% increase on September’s quarter.
AKE commented that EV sales grew strongly across all regions despite macro disruptions; sales in China alone were estimated at 1.9 million units during the quarter, increasing 107% period-on-period.
Allkem looked forward by stating:
‘The business is entering a period of significant growth with Naraha to begin commercial production later this year, Olaroz Stage 2 first production in the first half of next year, Sal de Vida scheduled to commence production in late 2023 and James Bay in mid-2024.’
Overlooked ASX lithium stocks
Lithium stocks have been the talk of the ASX in 2021, with eight of the top 10 best-performing stocks on the All Ords being in the lithium sector.
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Regards,
Kiryll Prakapenka,
