Core Lithium mothballs its NT mine leaving the fate of 150 jobs up in the air

Core Lithium has halted mining at its Finniss project in the NT and chief executive Gareth Manderson says significant improvement in the resource’s price is needed for it to resume.

Core Lithium chief executive Gareth Manderson says a “durable” improvement in lithium pricing will be needed for the company to return to production in the Northern Territory, after Core halted mining at its Finniss project on Friday.

The company said it had temporarily suspended open-pit mining operations at Finniss in response to falling lithium prices, two weeks after halting development of its BP33 underground extension to the operation amid a strategic review of its business. The company is set to book an impairment of the carrying value of the operation in its first-half results.

Core’s decision to suspend mining will affect up to 150 jobs at the company’s Northern Territory lithium operations, although Mr Manderson said the company was still working through the details of the decision with mining contractor Lucas.

Processing operations will continue from existing stockpiles. As at December 31, the group had about 280,000 tonnes of ore stockpiles, allowing for sufficient stocks to feed the concentrator until mid-2024 without any further mining, the company said.

Mr Manderson told The Australian the decision had been driven by the falling price for lithium, which has tumbled 85 per cent over the last year and 50 per cent since October.

“It’s difficult at the moment for anyone to get a read on what’s happening in the near term. But I think in the medium to long term, battery minerals is a good place to be and we just need to let this current softness sort itself out,” he said.

“At the back end of last year we still had people meeting with us who were interested in offtake from BP 33, for example. It will be interesting to see if that interest still continues through this year.”

Mr Manderson said that, although Core had made the difficult decision to cease mining at Finniss to preserve cash, he believed the company would be in a good position to ramp up activities again if there was a “durable” price recovery – although he would not be drawn on what price would be needed for the company to resume operations.

“The decision has been driven by the deterioration in price and so that is a significant determinant. But some of the other sort of commercial factors and logistics as well – like how durable we think the uptick might be that we’re observing as well,” he said.

“We’ve got offtake contracts, so we’ll obviously talk to our customers as well and make the decision using all of those parameters.”

Mr Manderson said the company’s strategic review had considered continuing mining at the open pit, and only shutter development work, but the company had elected to mothball all of its ongoing operations – except processing stockpiled ore – in order to avoid disrupting the company’s mining plan at Finniss.

“We looked at a range of different options, some of which might be to preference ore over development, for example – but we elected not to do that to reduce the threshold at which we would commence mining again,” he said.

Discussions with Lucas over how long it might take to resume mining have not yet concluded, Mr Manderson said, but he expected Core could get back on track quickly if the lithium price recovered.

“One of the advantages of the approach that we have taken is that it’s usually relatively flexible to do that,” he said.

The group will release revised operating costs, exploration, studies and capital expenditure guidance for FY24 in its December quarterly report to be released this month.

Core shares were down more than 10.5 per cent to 23.2c by afternoon trading – about 80 per cent below its value a year ago.

The lithium downturn has investors bracing for similar decisions at other lithium hopefuls, with Citi analysts last month issuing a warning on production costs in the sector amid falling lithium prices.

In her mid-December research note, Citi analyst Kate McCutcheon pointed to Core’s Finniss lithium operation as the most expensive producer, at around $US1600 a tonne for concentrate with a 6 per cent equivalent grade on an all-in sustaining cost basis. But Allkem’s Mt Cattlin mine in WA was also incurring average costs of about $US1500 a tonne and Mineral Resources’ Mt Marion tipped at about $US1300 a tonne.

Originally published as Core Lithium mothballs its NT mine leaving the fate of 150 jobs up in the air