Ann: Operations Update - Record Month of Production, page-34

Pleased myself that AJM are largely on target.  Production projection largely on track and now they just need to hit their cost target from the last quarterly.

* Apr - 12kt with downtime for the de-grit screen install.  Explains why they didn't release a production announcement then and waited to a full month of production post upgrade.  Near 16kt in May (that's the 48kt run rate promised).  So if they get say 17kt for June, that would be 45kt for the quarter, above 90% of nameplate capacity.  So this is pretty close to their 46kt projection.  

* The key now is hitting the A$20 mil costs figure projection from the last quarterly which would result in a low production cost of $20mil/45kt = A$444/t (US$311/t).  Selling at US$600/t would solidify AJM as profitable.

* A significant amount of room to improve costs too.  If they can hit US$311/t costs with 82% of nameplate and 62% (of 80% goal) recoveries, that is a great result.  They mention 'Overall lithium metal recovery for May remained steady at 62% (and in line with previous months and forecast), however the focus remains on bringing the recovery levels closer towards the 80% target'.  So the 62% was forecast into the $20 million quarterly cost projection.  So I suspect the projection is on track. Looking into the future, the plant is capable of pushing over the 220kt/y nameplate value (18.3kt/month = 55kt/quarter), so I'm expecting continued improvement up to and through nameplate with reducing costs.  

* Export wise for the quarter is looking good.  24.8kt so far, 13kt expected next week and likely another shipment before end of quarter or into next quarter.  Say the last shipment is the standard 8kt, that's a total of 45.8kt which is almost spot on for the quarterly production output.  I had feared that with JRO likely not taking shipment, that AJM might be meeting production targets but lacking sales but its seems the non-JRO offtakes are absorbing the production entirely.  Last shipment could be late (I'd bet it will be), however, the key is the production rate.  Ultimately, it will all be sold.  

* 'The outstanding performance of the mine comes at an opportune time for Altura as we recently returned from a successful marketing trip to China where we engaged with existing and potential new offtake partners.  Demand for quality spodumene remains strong, and we continue to field genuine interest for supply and Stage 2 offtake'
I'm sure AJM have been talking to JRO.  JRO is contractually obligated to buy 50kt of SC6 (US$30 mil worth) in 2019.  I have no idea in what position JRO are in terms of their own production restart to stay afloat but I'm doubtful about their future.  With AJM looking more like being significantly profitable, those remaining JRO shares would be a very enticing target for other companies.  I do suspect that JRO do not want to sell any of them at these prices however.  The most important point here in my mind is that the entirety of AJM's output production is being bought irrespective of JRO ineptness by its other offtakes. The JRO issue will sort itself out one way or another.