Allkem Limited (ASX|TSX:
AKE, the
Company) provides financial results for the Allkem
Group (
the Group) for the full year ended 30 June
2022 which includes results of the former Galaxy assets for the
10-month period post-merger date, between 25 August 2021 to 30 June
2022.
Record financial results have been achieved in
the first year of the highly successful merger of Orocobre Limited
and Galaxy Resources. The merger has generated substantial value
through the combination of outstanding operating assets and
development projects.
The Company has restructured around the global
portfolio and continues to strengthen the management, operating and
development teams by attracting the highest quality personnel.
New development and expansions are expected to
see the business expand three-fold by 2026 with the aim of
maintaining 10% market share as the lithium industry continues to
grow with the increasing adoption of electric vehicles.
Through effective management, the group has
significantly improved safety performance, enhanced sales contract
terms, continued product quality improvements, delivered positive
cost performance throughout the year while implementing the merger
and completed feasibility studies on three development projects
which includes a 2.5x increase of the interim Olaroz resource to
16Mt LCE1 and a 40% increase to Sal de Vida’s production capacity
to 45ktpa in two stages.2
HIGHLIGHTS
- Mt Cattlin and Olaroz3 delivered
record annual production volumes and operating profits despite the
ongoing impacts of COVID-19
- Group revenue for the period
increased over 800% to US$770 million, compared to the prior
year
- Record revenue from Mt Cattlin was
generated from sales of 200,715 dry metrics tonnes
(dmt) of spodumene concentrate at an average price
of US$2,221/tonne CIF2 for the period from 25 August 2021. Gross
cash margin of 80%
- Record revenue from Olaroz
increased 341% to US$293 million on sales of 12,512 tonnes of
lithium carbonate with average pricing increasing by 370% to
US$23,398/t FOB4. The gross profit margin was 82%
- Excellent operating performance and
highly supportive market conditions generated group gross profit of
US$605 million with group EBITDAIX of US$513 million and
consolidated net profit after tax of US$337.2 million (2021: net
loss of US$89.5 million) reflecting improved product prices,
focussed operational management and comprehensive cost control
mitigating inflationary pressures
- Strong cash generation and existing
cash balance is expected to fully fund development projects
- H1 FY23 lithium carbonate prices
will be approximately ~US$47,000/t FOB, excluding Naraha feedstock
which is an intermediate input for the production of battery grade
lithium hydroxide
- September quarter spodumene
concentrate prices are expected to be over US$5,000/t CIF SC6
DEVELOPMENT PROJECTS
- Olaroz Stage 2 has now reached over
91% completion and first production is still anticipated late H2
CY22. The successful completion of this project will deliver
material new production from H2 FY23 onwards
- Construction of the Naraha lithium
hydroxide plant in Japan was completed during the year, with first
production expected early Q4 CY22. Once product qualification is
complete, this plant will provide Allkem with exposure to the high
value lithium hydroxide market
- Construction at Sal de Vida
commenced in January 2022, the first pond has been filled, and
commissioning and first production continues to be expected by H2
CY23
- The Feasibility Study and Maiden
Ore Reserve for James Bay was released in December 2021 and
detailed engineering is advancing in parallel with stakeholder
engagement and permitting
Allkem Managing Director and CEO, Martin
Perez de Solay says:
“This has been a transformational year with the
highly successful merger of Orocobre and Galaxy which now provides
shareholders exposure to strongly profitable existing operations
and an enviable suite of development assets.
“We achieved record revenue for the Group, not
only from strengthened pricing but from successfully and safely
producing high-quality lithium products from our global operations
that have managed costs, improved safety performance and delivered
record production during a period of supply chain disruption,
labour shortage, high inflation and ongoing COVID-19 impacts.
“Amidst surging demand for lithium products our
team also achieved significant advancements at all our development
assets across the globe with both Olaroz Stage 2 and Naraha on the
cusp of commissioning this calendar year. Sal de Vida construction
is well underway and James Bay permitting is advancing.
“With two revenue generating operations being
supplemented by new operations in FY23 and a strong balance sheet,
we are fully funded to complete construction at Sal de Vida and the
development of James Bay.”
GROUP PROFIT OVERVIEW
The Group produced a Group EBITDAIX of US$513.1
million and consolidated net profit after tax of US$337.2 million
(2021: net loss of US$89.5 million). The net profit after tax
includes one off charges of US$12.8 million for Galaxy acquisition
costs, an inventory uplift on purchase price allocation related to
the merger of US$12.4 million, US$13.4 million related to
amortisation of customer contracts due to purchase price
allocation, gains of US$32.0 million from financial instruments,
and foreign exchange losses of US$9.6 million. Net finance costs
were US$13.8 million.
Net assets of the Group increased to US$3,081
million as at 30 June 2022 (30 June 2021: US$725 million) including
cash balances of US$664 million (30 June 2021: US$258 million). The
increase in net assets and cash of US$2,356 million and US$406
million is mainly due to the Galaxy merger transaction.
Group capital expenditure and exploration and
evaluation for the year totalled US$261.4 million (30 June 2021:
US$97.6 million) and the Mizuho Stage 1 and Pre-export loan
facilities were reduced by ~US$33.7 million.
|
Group |
Olaroz |
Mt Cattlin(10 months) |
|
30 Jun 2022 |
30 Jun 2021 |
30 Jun 2022 |
30 Jun 2021 |
30 Jun 2022 |
|
US $'000 |
US $'000 |
US $'000 |
US $'000 |
US $'000 |
Revenue |
769,818 |
84,760 |
292,758 |
66,370 |
451,925 |
EBITDAIX 1 |
513,085 |
4,188 |
220,431 |
11,452 |
336,178 |
Less depreciation & amortisation |
(49,944) |
(18,759) |
(17,717) |
(18,294) |
(30,309) |
EBITIX 2 |
463,141 |
(14,571) |
202,714 |
(6,842) |
305,869 |
Less interest income/(costs) |
(13,778) |
(21,119) |
(24,153) |
(29,739) |
1,177 |
EBTIX 3 |
449,363 |
(35,690) |
178,561 |
(36,581) |
307,046 |
Less acquisition costs |
(12,760) |
(1,243) |
- |
- |
- |
Less amortisation of customer contracts due to purchase price
allocation |
(13,400) |
- |
- |
- |
(13,400) |
Less inventory adjustment due to purchase price allocation |
(12,367) |
- |
- |
- |
(12,367) |
Add other income – gains from financial instruments |
32,033 |
2,711 |
- |
- |
- |
Less foreign currency gains/(losses) |
(9,567) |
(6,342) |
(7,481) |
(3,946) |
1,099 |
Less share of loss of associates, net of tax |
(2,951) |
(1,682) |
- |
- |
- |
Add rehabilitation provision remeasurement |
- |
3,504 |
- |
- |
- |
Less (impairment/write-downs)/ add realisation of inventory
write-downs |
(244) |
17,211 |
- |
18,138 |
- |
Segment profit/(loss) for the period before
tax |
430,107 |
(21,534) |
171,080 |
(22,389) |
282,378 |
Income tax expense |
(92,884) |
(67,940) |
(74,935) |
(67,940) |
(84,713) |
Total profit/(loss) for the period |
337,223 |
(89,474) |
96,145 |
(90,329) |
197,665 |
- EBITDAIX - Segment earnings before
interest, taxes, depreciation, amortisation, impairment, gains from
financial instruments, foreign currency (losses)/gains, share of
associate losses, business combination costs and other adjustments
due to purchase price allocation.
- EBITIX - Segment earnings before
interest, taxes, impairment, gains from financial instruments,
foreign currency (losses)/gains, share of associate losses,
business combination costs and other adjustments due to purchase
price allocation.
- EBTIX - Segment earnings before
taxes, impairment, gains from financial instruments, foreign
currency (losses)/gains, share of associate losses, business
combination costs and other adjustments due to purchase price
allocation.
|
|
This release was authorised by Mr Martin Perez de
Solay, CEO and Managing Director of Allkem Limited.
Allkem LimitedABN 31 112 589 910Level 35, 71 Eagle
StBrisbane, QLD 4000 |
Investor Relations & Media EnquiriesAndrew
BarberM: +61 418 783
701 E: Andrew.Barber@allkem.coPhoebe
LeeP: +61 7 3064
3600 E: Phoebe.Lee@allkem.co |
Connectinfo@allkem.co+61 7 3064
3600www.allkem.co |
|
|
|
IMPORTANT NOTICES
This investor ASX/TSX release
(Release) has been prepared by Allkem Limited (ACN
112 589 910) (the Company or
Allkem). It contains general information about the
Company as at the date of this Release. The information in this
Release should not be considered to be comprehensive or to comprise
all of the material which a shareholder or potential investor in
the Company may require in order to determine whether to deal in
Shares of Allkem. The information in this Release is of a general
nature only and does not purport to be complete. It should be read
in conjunction with the Company’s periodic and continuous
disclosure announcements which are available at allkem.co and with
the Australian Securities Exchange (ASX)
announcements, which are available at www.asx.com.au.
This Release does not take into account the
financial situation, investment objectives, tax situation or
particular needs of any person and nothing contained in this
Release constitutes investment, legal, tax, accounting or other
advice, nor does it contain all the information which would be
required in a disclosure document or prospectus prepared in
accordance with the requirements of the Corporations Act 2001 (Cth)
(Corporations Act). Readers or recipients of this
Release should, before making any decisions in relation to their
investment or potential investment in the Company, consider the
appropriateness of the information having regard to their own
individual investment objectives and financial situation and seek
their own professional investment, legal, taxation and accounting
advice appropriate to their particular circumstances.
This Release does not constitute or form part of
any offer, invitation, solicitation or recommendation to acquire,
purchase, subscribe for, sell or otherwise dispose of, or issue,
any Shares or any other financial product. Further, this Release
does not constitute financial product, investment advice (nor tax,
accounting or legal advice) or recommendation, nor shall it or any
part of it or the fact of its distribution form the basis of, or be
relied on in connection with, any contract or investment
decision.
The distribution of this Release in other
jurisdictions outside Australia may also be restricted by law and
any restrictions should be observed. Any failure to comply with
such restrictions may constitute a violation of applicable
securities laws.
Past performance information given in this
Release is given for illustrative purposes only and should not be
relied upon as (and is not) an indication of future
performance.
Forward Looking Statements
Forward-looking statements are based on current
expectations and beliefs and, by their nature, are subject to a
number of known and unknown risks and uncertainties that could
cause the actual results, performances and achievements to differ
materially from any expected future results, performances or
achievements expressed or implied by such forward-looking
statements, including but not limited to, the risk of further
changes in government regulations, policies or legislation; the
risks associated with the continued implementation of the merger
between the Company and Galaxy Resources Ltd, risks that further
funding may be required, but unavailable, for the ongoing
development of the Company’s projects; fluctuations or decreases in
commodity prices; uncertainty in the estimation, economic
viability, recoverability and processing of mineral resources;
risks associated with development of the Company Projects;
unexpected capital or operating cost increases; uncertainty of
meeting anticipated program milestones at the Company’s Projects;
risks associated with investment in publicly listed companies, such
as the Company; and risks associated with general economic
conditions.
Subject to any continuing obligation under
applicable law or relevant listing rules of the ASX, the Company
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements in this Release to
reflect any change in expectations in relation to any
forward-looking statements or any change in events, conditions or
circumstances on which any such statements are based. Nothing in
this Release shall under any circumstances (including by reason of
this Release remaining available and not being superseded or
replaced by any other Release or publication with respect to the
subject matter of this Release), create an implication that there
has been no change in the affairs of the Company since the date of
this Release.
Competent Person
StatementOlarozAny information in this
announcement that relates to Olaroz Project Mineral Resources is
extracted from the report entitled “Olaroz resource upgraded 2.5x
to 16.2 million tonnes LCE” released on 4 April 2022 which is
available to view on www.allkem.co and www.asx.com.au. The
Company confirms that it is not aware of any new information or
data that materially affects the information included in the
original market announcements and that all material assumptions and
technical parameters underpinning the Mineral Resources estimates
in the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person’s findings are presented have not
been materially modified from the original market announcement.
Any information in this announcement relating to
Olaroz scientific or technical information, production targets or
forecast financial information derived from a production target is
extracted from the ASX Announcement entitled entitled “Olaroz
resource upgraded 2.5x to 16.1 million tonnes LCE” released on 4
April 2022 which is available to view on www.allkem.co and
www.asx.com.au. The Company confirms that all the material
assumptions underpinning the scientific or technical information,
production targets or the forecast financial information derived
from a production target in the original market announcement
continue to apply and have not materially changed.
Cauchari Any information in
this release that relates to Cauchari Project Mineral Resources and
Ore Reserves is extracted from the release entitled “Cauchari JORC
Resource increases to 4.8 million tonnes Measured + Indicated and
1.5 million tonnes Inferred LCE” released on 7 March 2019 which is
available to view on www.allkem.co and www.asx.com.au. The
Company confirms that it is not aware of any new information or
data that materially affects the information included in the
original market announcements and that all material assumptions and
technical parameters underpinning the Mineral Resource and Ore
Reserve estimates in the relevant market announcement continue to
apply and have not materially changed. The Company confirms that
the form and context in which the Competent Person’s findings are
presented have not been materially modified from the original
market announcement.
Sal de Vida Any information in
this announcement that relates to Sal de Vida Project Exploration
Results, Mineral Resources & Ore Reserves is extracted from the
report entitled “Sal de Vida capacity increased to 45ktpa in two
stages” released on 4 April 2022 which is available to view on
www.allkem.co and www.asx.com.au. The Company confirms that it
is not aware of any new information or data that materially affects
the information included in the original market announcements and
that all material assumptions and technical parameters underpinning
the Mineral Resources and Ore Reserves estimates in the relevant
market announcement continue to apply and have not materially
changed. The Company confirms that the form and context in which
the Competent Person’s findings are presented have not been
materially modified from the original market announcement.
Any information in this announcement relating to
Sal de Vida scientific or technical information, production targets
or forecast financial information derived from a production target
is extracted from the ASX Announcement entitled “Sal de Vida
capacity increased to 45ktpa in two stages” released on 4 April
2022 which is available to view on www.allkem.co and
www.asx.com.au. The Company confirms that all the material
assumptions underpinning the scientific or technical information,
production targets or the forecast financial information derived
from a production target in the original market announcement
continue to apply and have not materially changed.
Not for
release or distribution
in the United StatesThis announcement has
been prepared for publication in Australia and may not be released
to U.S. wire services or distributed in the United States. This
announcement does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in the United States or
any other jurisdiction, and neither this announcement or anything
attached to this announcement shall form the basis of any contract
or commitment. Any securities described in this announcement have
not been, and will not be, registered under the U.S. Securities Act
of 1933 and may not be offered or sold in the United States except
in transactions registered under the U.S. Securities Act of 1933 or
exempt from, or not subject to, the registration of the U.S.
Securities Act of 1933 and applicable U.S. state securities
laws.
___________________________________
1 Refer to ‘Olaroz Interim Resource Update and
Stage 2 Economics’ released on 4 April 2022.2 Refer to ‘Sal de Vida
capacity increased to 45ktpa in two stages’ released on 4 April
2022.3 All figures 100% Olaroz Project basis.4 Allkem report Olaroz
price as “FOB” (Free On Board) which excludes insurance and freight
charges included in “CIF” (Cost, Insurance, Freight) pricing.
Therefore, the Company’s reported prices are net of freight
(shipping), insurance and sales commission. FOB prices are reported
by the Company to provide clarity on the sales revenue that is
recognized by SDJ, the joint venture company in Argentina.
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