Price of Lithium have been trending down since December 2022 and are almost 80% down since then. This led to the sharp decline in Lithium Shares.
The slump in the Lithium Mining Companies Stock was the result of twin effect of deceleration in EV demand and growth in supply. So much so that lithium producers cut output and even scaled back the expansion.
However, a recent news in the Chinese EV market of China offering incentives towards upgradation of old cars for newer models with lower emissions led to some rally in ASX Lithium Stocks.
There are also unconfirmed reports that China may increase inspections and harden environmental regulations.
Mineral Resources Limited (ASX: MIN)
Mineral Resources Limited’s Lithium business reported an Underlying EBITDA of $271.4M, impacted by declining lithium prices. However, lower costs, driven by improved plant recoveries and increased volumes, partially mitigated this impact.
MIN announced a significant 111% increase in the underground Mineral Resource at its Mt Marion lithium mine to 19.3Mt at 1.22% Li2O as of January 31, 2024. A diamond drilling program in the December quarter boosted confidence in the upper part of the North Pit underground resource. The company plans to conduct 80,000 meters of drilling over the next 18 months, targeting the underground resource beneath the Central and C2 pits. This supports the decision to commence the underground exploration decline, with the first blast recently completed.
The company is actively expanding its portfolio of lithium-focused projects. Proceeds from the Placement will also be allocated towards evaluating new lithium projects.
Liontown Resources Limited (ASX: LTR)
Liontown Resources Limited's ownership of the Kathleen Valley Project represents significant commercial potential for the company, poised for substantial sales activities and revenue generation in the near term.
This project is recognized as a Tier 1 lithium asset situated in a premier mining jurisdiction, boasting an extensive resource base of 156 million tonnes at 1.4% Li2O, with a projected multi-decade mine life. The project is also at an advanced stage of operations, nearing production. The flagship status of the Kathleen Valley Project distinguishes Liontown among other producers in Australia, given its substantial scale, high grade, and quality. This strong foundation supports robust future sales activities, evidenced by the company's Tier 1 offtake agreements with customers in the United States and South Korea. Furthermore, Liontown's commitment to renewable energy is notable, with the installation of 31,000 solar panels and an 18MW/h battery storage system. This initiative enables the company to derive over 60% of its power usage from renewable sources from the outset, aligning with the company's sustainability objectives. This also positions Liontown to mitigate future cost pressures and operating expenses associated with conventional energy sources, favouring project economics and potential returns.
In recent years, particularly in 2022, the company underwent substantial asset growth, with its asset base expanding significantly from $15 million in 2021 to $487 million. The acquisition and development of a broader range of mining assets primarily drove this growth. This trajectory continued, culminating in the asset base expanding further to $1.23 billion by the end of the latest half-year period. This remarkable increase in asset value underscores the company's robust capital structure, which is well-equipped to support substantial financing needs.
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