Allkem hits record revenue, profit ahead of Livent merger
12:19PM AUGUST 22, 2023
Lithium producer Allkem has handed down a record set of full-year results as it looks to close a $15.7bn merger with US lithium giant Livent.
Net profit from continuing operations rose by 57 per cent in the 12 months to June, to a record $US524.6m, helped by a 62 per cent increase in revenue, which also hit a new record at $US1.2bn.
Record revenue was reported at the company’s Olaroz brine-based lithium facility in northern Argentina and also at its open-pit mine and concentrator in southern Western Australia.
A surge in lithium prices supported the strong result at both facilities, with average lithium carbonate pricing almost doubling to $US43,981 a tonne during the year, and spodumene concentrate up 120 per cent to $US4879 a tonne.
Allkem managing director Martin Perez de Solay said the “outstanding full year results” demonstrated the quality and profitability of the company’s operations.
“FY23 revenue hit new records and were underpinned by record production at Olaroz and strong performance at Mt Cattlin, which achieved record run rates towards the end of the year,” he said.
“Amidst strong demand for lithium we delivered first production at the Naraha Lithium Hydroxide Plant (Japan) and achieved first production at Olaroz Stage 2.
“With two revenue generating operations being supplemented in the near future by Olaroz Stage 2 and a strong balance sheet, we are fully funded to complete construction at Sal de Vida (brine project in Argentina) and the development of James Bay (mine in Quebec, Canada).
“Our strategy to create a leading global integrated lithium chemicals producer will be accelerated by the proposed merger with Livent.”
Allkem and New York-listed Livent are expected to complete their merger by the end of the year, creating the world’s third largest producer of lithium - used to make batteries and in demand with the trend towards electric vehicles.
Under the terms of the deal, announced in May, Allkem will hold 56 per cent of the merged entity, which will be headquartered in the US and listed on the NYSE and ASX.
The company will be run by Livent chief executive Paul Graves and chaired by Allkem chairman Peter Coleman, who previously ran Woodside Energy.
Allkem expects production at Olaroz to reach 22,000 to 26,000 tonnes in 2023-24, up from 16,703 tonnes, while production at Mt Cattlin is expected to reach 210,000 to 230,000 tonnes, up from 130,984 tonnes in 2022-23.
In a note to clients Citi analyst Kate McCutcheon said Allkem’s strong full-year result and brighter production outlook were likely to send the company’s share price higher on Tuesday.
Allkem shares were trading 2.6 per cent higher on Tuesday at $14.23.
