Australia's MinRes flags further interest in Essential Metals (updated)

Essential Metals

26/04/2023 02:42

(Adds details of results, background)
       MELBOURNE, April 26 (Reuters) - Australia's Mineral
Resources  MIN.AX  on Wednesday flagged appetite for a larger
stake in lithium junior Essential Metals  ESS.AX , after it
logged a more than 40% jump in expected production costs at a
lithium project in Western Australia.
    The diversified miner, which produces iron ore and lithium,
and also operates a mining services unit, took a surprise 19.95%
stake in the lithium junior earlier this month, effectively
blocking a bid by a rival joint venture of Tianqi  002466.SZ  
and IGO Ltd  IGO.AX . 
    "MinRes' interest in Essential is consistent with the
company's focus on lithium opportunities in the Mt Marion
region," it said. Essential's Pioneer Dome lithium project is
approximately 100 kilometres from Mt Marion in the state's south
west.  
     The miner is doubling Mt Marion's production to 900,000
tonnes of spodumene by May on last year's levels from the mine,
which it owns 50%:50% with China's Ganfeng Lithium  002460.SZ .
Its share of production is exported and processed into lithium
battery chemicals under an agreement with Ganfeng. 
    While costs for the expansion remain in line with initial
estimates of A$120 million, the company expects spodumene
free-on-board (FOB) costs to be between A$1,200 and A$1,250 per
tonne for fiscal 2023, above the previous outlook of A$850-A900
per tonne. 
    The revised guidance reflects impact of delay in plant
expansion and mine sequencing, resulting in the drawdown of
contact ore stockpile, the company said. 
    Sales from its Wodgina joint venture with lithium major
Albemarle Corp  ALB.N  fell to 5,000 to 6,000 tonnes from
8,500-9,500 tonnes, reflecting current marketing arrangements
which are managed by the U.S. major, as well as lower prices. 
    The 60:40 joint venture structure which includes the
Kemerton lithium chemicals refinery, is currently being
restructured, after which MinRes will market its own product. 
        However, the miner reported higher iron ore shipments of
4.5 million wet metric tonnes for the third quarter, nearly 10%
higher on a quarter-on-quarter comparison.
    This beat RBC estimates of 4.3 million per wet metric tonne.

 (Reporting by Nausheen Thusoo in Bengaluru and Melanie Burton
in Melbourne; editing by Uttaresh Venkateshwaran)
 ((Nausheen.Thusoo@thomsonreuters.com;))