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Lithium Australia (ASX:LIT) - Managing Director, Adrian Griffin - The Market Herald
Managing Director, Adrian Griffin
Source: The West Australian
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  • Lithium Australia (LIT) is implementing sweeping operational changes to alleviate COVID-19’s recent impact on the battery metals industry
  • The company believes the lithium and cobalt price is facing a prolonged recovery
  • Therefore, LIT wants to reduce its outgoing expenses and increase support for its businesses closest to positive cash flow
  • As a result, reductions have been made at the company’s cathode-power production company VSPC, as well as at its chemical business and its raw minerals division
  • Meanwhile, the company hopes to generate near-term positive cash-flow from its battery-based energy storage subsidiary and its used-battery recycling operations
  • Lithium Australia shares are steady in early trade, priced at just under five cents per share

Lithium Australia (LIT) is implementing sweeping operational changes to alleviate COVID-19’s impact on the battery metals industry.

While the price for industrial metals like copper, nickel and steel have bounced back quickly since the onset of the COVID-19 pandemic, the company believes the lithium and cobalt price may take longer to recover.

As a result, Lithium Australia plans to further reduce its outgoing expenses and increase its support for operations that are closest to positive cash flow.

Case numbers remain low in Western Australia, where the company is headquartered, but border and maritime restrictions continue to make the company’s operations difficult.

Due to these headwinds, the company is now contemplating further reductions at operations that do not have a possible near-term financial outcome. Thus far, reductions have been made at the company’s cathode-power production company VSPC and in its chemicals and raw minerals divisions.

Following the reductions, Lithium Australia will focus its time on operations and subsidiaries that are most likely to generate near-term positive cash-flow. These operations include Soluna Au, which develop battery-based energy storage, and Envirostream Australia, which recycles used batteries.

The company expects revenue from both these operations to improve in the near-term, with Soluna expected to post a positive quarterly cash flow by the end of the calendar year.

Lithium Australia’s Managing Director Adrian Griffin comment on the cash saving measures and the challenges facing the company.

"Lithium Australia has taken significant measures to refocus its business on its revenue-generating battery recycling and battery sales businesses, which it expects will generate significant revenue during the financial year," he noted.

“The company has also reduced its cash burn for the financial year, which unfortunately means some reduction in workforce numbers. However, we are striving to minimise direct impacts on employees. Funding has been refocused on the group business units with the most capital efficiency, in an effort to drive value for shareholders,” Adrian said. 

The company currently has $3.5 million cash on hand and is expecting significant tax refunds in the next six months to help bolster its liquidity reserves.

Lithium Australia shares are steady in early trade, priced at 4.9 cents per share.

LIT by the numbers
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