Galaxy Resources is set to scale back operations at the Mt Cattlin mine by up to 40 per cent due to the challenging market conditions that the lithium industry is facing.
The company is reviewing operations at the Ravensthorpe mine in Western Australia and the expected outcome is the 40 per cent cut to mined material in 2020.
Galaxy stated there would however be no changes to its staffing or contractors, and product stockpiles are expected to be sufficient to meet its 2020 contracted customers’ requirements.
The reduced operating scale and Galaxy’s existing cost initiatives will allow the company to maintain a low unit operating cost and a forecasted operating cash margin.
“They key drivers in this review are to prioritise value over volume. Cost reduction initiatives continue to be a major focus at Mt Cattlin,” Galaxy reported in an ASX statement.
“Galaxy has undertaken a review of all key contracts, including operational and sales and marketing agreements.
“Several further potential sources of cost reduction have been identified and are being pursued. Pleasingly, the response of contracting partners to negotiations have been positive in reducing costs.”
Mt Cattlin produced 50,014 dry metric tonnes of lithium concentrate last quarter, which was the midpoint of its 45,000 to 55,000 guidance.
Its total shipment volume of lithium concentrate however, was slightly below its 60,000 to 70,000 dry metric tonnes at 58,278 dry metric tonnes.
As Mt Cattlin operations head towards a slow down, Galaxy has been developing its Sal de Vida project in Argentina by advancing the dual stream test work program throughout the last quarter.
Galaxy expects Sal de Vida’s refined project plan to be completed during the September quarter. Galaxy’s feasibility study report found Sal de Vida has the potential to generate total annual revenues of $US354 million ($519 million).
The company finished the quarter with a closing cash balance of $US169 million and a debt of $US32 million.