11 July 2024 Lithium Australia’s recycling operations achieve maiden operating cash profit
HIGHLIGHTS
▪ Lithium Australia’s recycling operations has achieved maiden Operating Cash Profit1 in Q4FY24 and the Company is focused on growing operating profit on a sustainable basis
▪ The result was driven by the growth in our upstream ‘Fee for Service’ recycling model, increasing overall revenues and lowering dependence on downstream commodity sales
▪ The strategic shift to large-format lithium-ion battery (LIB) collections, combined with safety and operational improvements, underpins the Company’s enhanced unit economics
▪ Upstream battery feedstock and revenues secured through new exclusive commercial agreements with customers including, LG Energy Solution, Volvo and Hyundai Glovis2
▪ Recent downstream off-take agreement with SungEel HiTech underpins downstream sales and current joint development discussions, which are on track for completion in CY24
Lithium Australia Ltd (ASX:LIT) (“Lithium Australia” or the “Company”) is pleased to announce that its subsidiary, Envirostream Australia Pty Ltd (“Envirostream”), has recently achieved a significant milestone of delivering positive operating profit during Q4 FY24. The achievement was driven by the Company’s transition towards an upstream service model, which has increased revenues with a higher proportion of revenues to now received upfront through recycling fees.
Comment from Lithium Australia CEO and Managing Director, Simon Linge
“We are very excited to have achieved a significant milestone of maiden positive operating cash profit during Q4 FY24 within our recycling business. This outcome, delivered in a period of low commodity prices, was driven by our growth in our fee for service model for battery recycling with all customers over the last year, which enables us to receive the majority of revenue upfront on improved terms.
Our revised commercial model supports our ongoing joint development discussions with SungEel HiTech, which seek to scale up our operations in line with expected growth in LIB collection volumes.”
Comment from Lithium Australia General Manager – Recycling, Steven Marshall
“Delivery of this outcome is a team effort, and I would like to thank our people for their focus on safe production and our customers who have chosen us for their sustainable battery disposal and recycling.
Achievement of the improved unit economics was driven by the increased collection volumes of large-format LIBs from exclusive recycling services agreements with leading OEMs3. These agreements, which would not have been possible without our safety and operational improvements, also allowed the Company to reduce its exposure to market volatility relating to commodity prices, including MMD, our key processed output.
With an improved commercial model in place, we are focused on signing new recycling agreements with leading OEMs to accelerate battery collection volumes and delivering operational efficiencies in FY25 and beyond.”
