Galaxy Resources has pushed back the first shipment at its Mt Cattlin lithium mine after several delays and cost overruns, with the company’s directors volunteering to fund any cash shortfall out of their own pockets.
Galaxy said today that it had assumed full management control of Mt Cattlin following completion of its takeover of General Mining Corporation, and had engaged Primero Group as project manager for the final stages of construction, commissioning and ramp-up of the lithium project.
General Mining announced in July that it planned to double the annual throughput of Mt Cattlin to 1.6 million tonnes per annum, meaning upgrades to the mica removal circuit would be needed.
These upgrades, coupled with project management changes and wet weather, have pushed back first production to November, with first shipment now expected in December.
The shipment was originally pencilled in for the September quarter.
“Galaxy has kept their offtake counterparty, Mitsubishi Corporation, fully informed of the anticipated delays,” Galaxy said in a statement.
“Notwithstanding the anticipated delay to first shipment, customers have requested increased tonnage above the already contracted amount for 2017 and later years.”
Galaxy also told the market today that Primero had found the costs required to bring Mt Cattlin into production had passed the previously forecast $15 million, and were now expected to reach $22.4 million.
“To the extent that any cash shortfall is forecast after utilisation of existing cash resources, including the prepayments received from the Chinese customers, some directors of the company have indicated their willingness to assist in arranging the necessary working capital from their own resources until such time as significant free cashflow is achieved in 2017 when operations reach full capacity,” it said.
“Holders of outstanding options including those held by director Michael Fotios, resulting from the takeover of General Mining, have committed to exercising early during September.
“The amount to be received by Galaxy from the exercise of these options is about $2.4 million.”
Refurbishment and upgrades to Mt Cattlin are over 80 per cent complete.
Galaxy shares were 3.2 per cent lower to 39.2 cents each at the close of trade.
