GXY desperate for Alita, page-82

Lithium bust puts Bald Hill mine on the edge

From AFR on the 14th of Aug, it was flag then that A40 is in trouble.

The lithium bust is threatening to claim its first casualty, with the operator of the Bald Hill mine suspended from trading amid fears it could run out of money within months and is close to breaching debt covenants.Alita Resources was deep in talks with its major lender Tribeca Investment Partners this week over whether it should continue mining at Bald Hill, near Widgiemooltha in Western Australia.The mine is not profitable at current prices for lithium-rich spodumene concentrate, which based on disclosures by rival producer Mineral Resources have slumped from $US1070 per a tonne this time last year to $US608 per tonne.Some Australian lithium miners are deferring shipments to cope with very weak market conditions.RELATEDAustralia's lithium export 'boom' underwhelmsMorgan Stanley estimates spot prices for spodumene concentrate are closer to $US535 per tonne.Alita, which was previously named Tawana Resources then Alliance Mineral Assets, had $16.6 million of cash and cash equivalent at July 25.

Alita expected cash outflows to be closer to $57 million in the three months to September 30, and while some of that spending has been deferred, the company appears to be at risk of insolvency.Tribeca launched a natural resources credit fund last year, and consolidated Alita's various debts in March.Tribeca has already waived several potential covenant breaches on its $40 million loan to Alita, but with an interest rate close to 15 per cent and no sign of improvement in lithium markets, repayment of the debt next year appears unlikely.Rival lithium producer Galaxy Resources subscribed for shares in Alita earlier this year, and was the biggest shareholder in the company on Wednesday with 9.7 per cent, according to Bloomberg data.Galaxy would likely be heavily involved if Alita's assets were carved up, given spodumene from Bald Hill and Galaxy's Mt Cattlin mine are exported through the same port at Esperance.