Galaxy Resources says it will scale back operations next year at its Mt Cattlin lithium mine in WA in an effort to stay in business until the price of the electric vehicle battery component improves.
Galaxy says the current pricing for lithium products is unsustainable and it expects further supply rationalisation as mines are placed into care and maintenance mode – as Mt Cattlin itself was from 2013 to 2016.
A roughly 60 per cent reduction in mining at the Ravensthorpe mine would reduce operating costs by around $US20 million ($A29 million), Galaxy said.
Nonetheless, shares in the company had shed 3.01 per cent to $1.0475 by 1130 AEDT following Monday’s announcement.
Shares in Galaxy are 52 per cent lower in 2019 and are 77 per cent down on an eight-year peak of $4.54 hit in January 2018.
Galaxy had $US169 million in cash and $US32 million in debt as of September 30, down from $US176.3 million in cash and zero debt three months prior.
Because staffing levels will be unchanged, production at Mt Cattlin “can be ramped up swiftly and efficiently should market conditions materially improve,” Galaxy said.
Galaxy said it was bullish overall about the global demand for lithium, especially as China switches more towards electric vehicles.
Galaxy says it will make a final investment decision in mid-2020 about developing its Sal de Vida lithium and potash brine project in Argentina.
A detailed geotechnical analysis of its James Bay lithium project in Quebec, Canada will begin next year, Galaxy said.