Altura Mining’s fearless lithium approach put to test

Altura Mining is set to launch the first test of the market for Australian lithium miners for the new year.

The price of lithium was about $US500 a tonne at the end of last year

Altura Mining is set to launch the first test of the market for Australian lithium miners for the new year, kicking off a $US160m ($231m) debt refinancing to see it through to a hoped-for market recovery.

Altura owed $US142.9m at the end of September, and last year’s tumbling lithium price means it has not operating profitably since declaring commercial production at its Pilbara mine in March. It booked after-tax losses of $17.1m in the September quarter alone, according to disclosure documents associated with the refinancing.

With an August deadline looming for the repayment of its current debts, and no end in sight for the tumbling lithium price — down from about $US900 a tonne for concentrate grading 6 per cent in 2018 to closer to $US500 a tonne at the end of last year — Altura is hoping its lenders tip back in to extend it a lifeline until the market returns.

Outside of the tier-one Greenbushes lithium mine in WA’s southwest, Altura is the only Australian producer that has not slashed output, or put projects on ice, in response to the tumbling lithium price.

Mineral Resources is believed to still be operating its Mount ­Marion mine near Kalgoorlie, a joint venture with China’s Ganfeng Lithium, at nameplate ­capacity, but its Wodgina mine in the Pilbara was mothballed within days of lithium major ­Albemarle taking 60 per cent ownership of the new project.

Pilbara Minerals, which is ­effectively mining the same ­deposit as Altura, mothballed its Pilgangoora project last year in response to market conditions, Galaxy Resources slashed output and Alita Resources went bust. All have said they expect a market recovery in the second half of 2020, as the build-out of downstream lithium processing plants in China lifts to meet demand for batteries.

But while Altura downgraded December quarter sales expectations shortly before Christmas, slashing about 10,000-15,000 tonnes from its expected shipments to 40,000 tonnes, it blamed the shortfall on a plant shutdown and a delayed cargo, and said it expected to lift total production this year.

Altura’s decision to run full tilt as its competitors mothball projects may help cement its position in the market if the company can outlast the price downturn — but it will pay a stiff price for the continued support of its lenders, with the debt on offer at a 14 per cent coupon rate.

But its disclosure documents suggest it still needs the goodwill of its neighbours to keep operating in the long term, with the company telling potential investors it is still to cut a deal with Pilbara Minerals to access Pilbara’s tenements as a staging post to mine deeper sections of its own portion of the deposit.

Altura entered a trading halt on Monday and is expected to announce the results of its refinancing on Thursday morning. Its shares last traded at 6.3c.