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| Western Australia's Greenbushes lithium mine, whose financial and production metrics have had greater visibility since ASX-listed IGO Ltd. acquired a stake in the asset in 2020. |
The world's biggest hard rock lithium mine, Greenbushes in Western Australia, hit record production in the second quarter of fiscal 2022, according to part-owner IGO Ltd., amid expectations of soaring spodumene revenue prices.
A record total of 1.19 million bank cubic meters of material was mined at Greenbushes for the quarter, including 1.03 million tonnes of ore at an average grade of 2.42% lithium oxide, IGO said in its Jan. 31 quarterly.
"All the prices are far better than what we imagined when we're sitting there doing due diligence in late 2020, when spodumene was at the bottom of the market," IGO Managing Director and CEO Peter Bradford said, referring to the lead-up to IGO's acquisition of a 25% stake in Greenbushes in December 2020.
"Everything at Greenbushes has been accelerated, and that's because back [in December 2020] spodumene prices were around US$400 per tonne and are now well above US$2,000/t spot," Bradford told a Jan. 31 analyst call.
The Perth-based miner expects the free-on-board price of chemical-grade spodumene concentrate to increase to about US$1,770/t in the six months to June from US$592/t FOB in its fiscal first half. IGO had used US$590/t for its long-term pricing assumption in its due diligence on Greenbushes, the CEO said.
"So it's been a great turnaround in the market, and as [Western Australian lithium producer Pilbara Minerals Ltd. Managing Director] Ken Brinsden once said, it's turned around so fast it actually gives you whiplash watching it," Bradford said.
"There is a desire from all stakeholders at Greenbushes to accelerate the expansion plans and increase production."
Greenbushes recorded 258,659 tonnes of attributable spodumene concentrate output in the December 2021 quarter, down from 268,000 tonnes in the prior quarter and bringing its fiscal half-year output to 526,000 tonnes, according to IGO's Jan. 31 quarterly report.
IGO expects Greenbushes to deliver "significant cash" to fund the ongoing expansion activities, Bradford said. The generated cash will fund ongoing trial production activities at the Kwinana lithium refinery, which produced its first lithium hydroxide chemical product in August 2021 and is expected to produce its first battery-grade lithium hydroxide by March.
Greenbushes has a technical grade plant and two chemical grade plants, CGP1 and CGP2, with aggregate installed capacity of 1.34 Mtpy of spodumene concentrate. Three more concentrators are planned at Greenbushes, with a tailings retreatment plant nearing completion, CGP3 due to start construction in 2022 and a financial investment decision on CGP4 due in 2025.
IGO's fiscal second-quarter net profit jumped to A$52.3 million from a year-ago net profit of A$8.8 million due to higher revenue from the Nova base metals operations in Western Australia. The company's overall sales revenue of A$188 million for the quarter was in line with the previous quarter.