viewLithium Australia NL

Lithium Australia subsidiaries advance revenues while group adapts operations around COVID-19

The company is taking steps to ensure all business units survive to reap the rewards of years of research and intellectual property in battery materials and processing accumulated to date.

Lithium Australia NL - Lithium Australia adapts operations around the COVID-19 pandemic
Metals produced from the recycling of batteries

Lithium Australia NL (ASX:LIT) subsidiaries are advancing revenues while the overall group has adapted all operations in response to the impacts of the COVID-19 pandemic.

Battery recycling subsidiary Envirostream Australia is ramping up revenue after plant commissioning while the revenue of battery business Soluna Australia is expected to begin this quarter.

LIT group's austerity measures see most employees working from home while, for those continuing to occupy group premises during working hours, strict social distancing and hygiene standards are being observed.

Lithium Australia managing director Adrian Griffin said: "We at Lithium Australia are deeply concerned for the health and well-being of group employees, as well as their families, dependents and friends, in these difficult times.

“We encourage everyone to show concern for others and act with caution regarding their own exposure to COVID-19.

“Let’s all hope for a speedy global recovery from the pandemic, for resumption of normal life as soon as possible and for the continued success of our business, for the benefit of all stakeholders."

Envirostream revenue ramps-up

Following an extended period of commissioning and plant optimisation, the Melbourne recycling facility of subsidiary Envirostream Australia Pty Ltd made its second shipment of mixed metal dust (MMD), comprising energy-active materials recovered from lithium-ion batteries (LIBs), on March 27, 2020.

The plant is now running at planned capacity and with double shifts – operating 16 hours a day, five days a week – which will continue until the current stock of more than 110 tonnes of LIBs has been depleted.

In addition, Envirostream has begun commissioning of its copper and aluminium (Cu/Al) separation circuit which should be completed in the coming weeks.

This ensures near-term revenue from 178 tonnes of mixed Cu/Al stock, also recovered from LIBs.

Due to financial market volatility, the company’s board has decided to delay the float of Envirostream, which will remain focused on increasing battery collection and reducing inventory levels to maximise revenue and cash flow.

First Soluna Australia sales expected

The group’s battery business Soluna Australia is expecting revenue to begin this quarter after formalising its agreement with DLG Battery Co (China), a major offshore battery manufacturer, in the December 2019 quarter.

The agreement aims to commercialise Lithium Australia’s subsidiary VSPC Ltd cathode powders in China and develop a battery distribution business within Australia.

First sales for Soluna should begin this quarter, with the business expected to be cashflow-positive by the next quarter owing to its low costs and overheads.

Cost reductions and subsidies

Lithium Australia has decided that, rather than retrenchments, it will rely on a combination of reduced hours, leave entitlements and salary sacrifice in the form of company shares to ensure as many staff as possible have the opportunity to remain employed.

In addition, members of the Lithium Australia board have opted to receive half their remuneration in the form of company shares for the next six months.

The company has also applied for the Australian Federal Government’s JobKeeper program, where eligible employees will be guaranteed a minimum payment of $1,500 per fortnight.

The group expects to qualify for up to $300,000 in PAYG subsidies over the next six months, and Lithium Australia will also be exempt from Western Australian state payroll tax from March through to June 2020.

Reduced exploration expenditure

Only essential Lithium Australia exploration activities will continue and, even then, only in accordance with government-imposed restrictions on the movement of personnel from state-to-state or region-to-region.

Lithium Australia is a member of The Association of Mining and Exploration Companies, which is lobbying state governments to reduce tenement holding costs and commitments.

Funded for 2020

The group is focusing on the elements of its business that can generate revenue in the near term and is deferring technology development and exploration expenditures in the chemicals and raw materials units.

As at March 31, 2020, the company held $3.3 million in cash, meaning it is funded for at least this calendar year based on current assumptions.

The company recently completed the LITCE call and raised over $310,000 with an auction of LITCE forfeited shares to be completed.

Quick facts: Lithium Australia NL

Price: 0.052 AUD

Market: ASX
Market Cap: $30.95 m

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