Prices slide
3Q23 PRODUCTION
Need To Know
- Outlook for spodumene price in 4Q23 is -23%, lithium carbonate price -21% qoq
- Lower revenue on lower sales volumes in 3Q
- Net cash US$558m
Allkem product sales at Mt Cattlin and Olaroz were below production levels resulting in softer revenue outcome.
Mt Cattlin cash costs were significantly higher on a qoq basis. Olaroz cash costs were also higher but in-line in absolute terms.
Average spodumene sales price of US$5,702/dmt was achieved at Mt Cattlin (WA) on sales volume of 21,553 dmt (production 38,915 dmt at 5.3% Li2O grade). This generated revenue of US$123m. An additional US$33m revenue came from shipments of 54,064 dmt of low grade spodumene concentrate. Sturdy LiOH demand outside China has outshone the price erosion happening in China. AKE is expecting June quarter prices around US$5,000/dmt (CIF 6.0SC equivalent). Cash costs of production will be around US$950/dmt for FY23f.
Olaroz (Argentina) production of 4,102t of lithium carbonate was up 38% on the pcp (65% of it was technical grade). Sales volume of 2,904t created revenue of US$159m at an average price of US$53,175/t. The weighted average price for sales of lithium carbonate in 4Q23 is expected to be ~US$42,000/t. This is down 21% qoq with consensus at US$46,000/t.
Investment View
Commodity prices continue to slide, noting that the first quarter of the calendar year is usually the slowest period for lithium consumption, according to AKE. Factors within the EV market globally do affect the demand for product and especially due to the Chinese New Year. The longer term trend for decarbonisation of the transport market remains immutable so the less certain aspect of supply will continue to influence commodity pricing.
AKE’s net cash position of US$557.9m at 31 March 2023 remains strong. Quarterly capex of US$122m was covered by US$180m of operating cashflow.
Stock Overview
Share Price
Company Overview
Allkem is a lithium producer with assets in WA and Argentina. It has expansion projects in Argentina and Canada. It has a lithium hydroxide plant in Japan.
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