Key points
- Allkem was formed following the merger of Galaxy Resources and Orocobre
- Its combined operations delivered strong revenues and generated significant cash during the first half
- Its lithium pricing is expected to get even stronger during the second half
The Allkem Ltd (ASX: AKE) share price is on the move on Tuesday.
In morning trade, the lithium giant's shares are up 2.5% to $11.63.
Why is the Allkem share price rising again?
The Allkem share price is rising today after it revealed that it reported strong production results and pricing from its Mt Cattlin and Olaroz operations during the first half.
Over at Mt Cattlin, the company achieved calendar year production of 230,065 dry metric tonnes (dmt) of spodumene concentrate. This compares to its previous guidance of 220,000 dmt. During the second quarter, a total of 38,071 tonnes were shipped, generating US$60.7 million in revenue. An additional shipment of 23,000 tonnes is scheduled for dispatch in January.
Pleasingly, Mt Cattlin looks set to benefit from positive lithium product pricing momentum in the second half of FY 2022. It notes that spodumene shipments are already at US$2,500/t CIF (6.0% Li2O).
For FY 2022, management expects Mt Cattlin concentrate production of 200,000 to 210,000 dmt with a grade of 5.5% to 5.7% and a cash cost of US$400 to US$430 per tonne.
Olaroz on form
Over at Olaroz, 3,644 tonnes of lithium carbonate were produced during the quarter. From this, 51% was battery grade, which was in line with guidance. Sales came in at 3,293 tonnes with an average price of US$12,491 per tonne FOB. This generated revenue of US$41.1 million with a gross cash margin of 65% (US$8,155/tonne).
Once again, prices look set to continue to improve in the near term. Management revealed that it expects lithium carbonate prices for the second half of FY 2022 to be approximately US$20,000 per tonne. This is up 60% from the prices commanded during the first half.
Quarterly revenue tops US$100 million
Allkem ultimately reported quarterly group revenue of approximately US$107 million and a group gross operating cash margin of US$70 million.
As a result of the above, at the end of the half, Allkem's cash balance stood at US$426.6 million. From this, US$118.8 million is being held as a guarantee for the debt facilities until the practical completion for the Naraha and Olaroz Expansion projects.
