Shares in Galaxy Resources tumbled after the lithium miner was forced to shelve plans to appoint a joint venture partner for its Argentinian project because no party was prepared to cough up the cash it expected.
The Perth-based company, which earlier this month replaced boss Anthony Tse with Iluka executive Simon Hay, said it had not been able to agree on a transaction structure with a third party that offered an appropriate valuation of the asset.
Galaxy has been pushing back a self-imposed deadline to find a partner for the $US376 million Sal de Vida project since the end of last year after appointing JP Morgan to handle negotiations.
The company said it was prudent to remain patient with the project, attributing its failure to find a partner to prevailing market sentiment and weakness in short-term contract prices for lithium.
It said it remained confident in the fundamentals of lithium and market growth potential as well as the world-class quality of the underlying 5Mt brine asset, particularly after Korean giant POSCO agreed to pay $US280 million for the project’s non-core northern tenements last year.
Meanwhile Galaxy also reported continuing lower than expected recovery rates at its Mt Cattlin hard rock lithium operation near Ravensthorpe.
While recovery rates were up four percentage points to 51 per cent in the March quarter, it was still well below the targeted rate of above 70 per cent.
Production was up 24 per cent to 41,874t on higher grade of processed ore, a 3 per cent increase in the grade of ore treated and the improved recovery rate.
Galaxy attributed a 62 per cent drop in lithium concentrate shipped to 15,192t to the timing of shipments, which it said would be heavily weighted to the June quarter.
Shares in the company were off 21.5¢, or 12 per cent, to $1.635.