PERTH (miningweekly.com) – Lithium miner Allkem has reported that group revenues for the three months to September had fallen to $298-million, from the $337-million in the June quarter, as spodumene production from the Mt Cattlin operation tumbled.

The ASX- and TSX-listed Allkem on Friday reported that during the September quarter the Mt Cattlin operation, in Western Australia produced 17 606 t of spodumene and shipped 21 215 t.

This compared with the 24 845 t of spodumene concentrate produced from Mt Cattlin during the June quarter.

Allkem in August flagged lower production from the Mt Cattlin operation for the 2023 financial year, reducing output expectations from between 160 000 t and 170 000 t, to between 140 000 t and 150 000 t. The miner told shareholders at the time that mining operations in Western Australia had been impacted by ongoing labour and equipment shortages, resulting in the delay in pre-stripping the 2NW pit, coupled with the temporary unfavourable fine-grained mineralisation.

Mitigating actions had been implemented at the operation, the miner told shareholders.

Cash cost of production from Mt Cattlin for the 2023 financial year is forecast at around $900/t, up from the $796/t free-on-board achieved in the September quarter, reflecting the current operating environment and mitigation actions, ongoing development of the 2NW pit, and lower ore grades.

An additional 60 000 t of lower grade material will be sold from stockpiles and fine-grained ore will be processed during the current half-year to help offset the deferred delivery of spodumene volumes.

At Olaroz, in Argentina, production in the June quarter reached 3 289 t, down slightly from the 3 445 t produced in the June quarter. Battery grade lithium carbonate production for the quarter was 43% in line with customer requirements.

Quarterly product sales from Olaroz reached 3 721 t, up from the 3 440 t sold in the previous quarter, generating revenues of $150-million.

Meanwhile, construction of the Olaroz Stage 2 lithium facility continues with over 800 personnel currently on site.

Allkem said on Friday it has recently been advised by suppliers of key piping and electrical equipment that delivery of these items would be delayed owing to manufacturing and supply chain constraints. As such, the start of production would be delayed and was now expected to occur by the second quarter of the 2023 calendar year, instead of the latter part of the second half of the 2022 financial year.

Meanwhile a review of the capital expenditure for the Stage 2 expansion has been completed, and subject to a joint venture assessment and approval, it is expected that total capital expenditure will increase approximately 12% to $425-million excluding VAT and working capital.

Allkem said that this increase will be funded through operating cashflow. Capital intensity remains at a very competitive $17 000/t despite manufacturing delays, Covid-related costs and supply chain/logistics constraints.

The Stage 2 expansion will comprise a primary lithium carbonate production circuit designed to deliver an additional 25 000 t/y of technical grade lithium carbonate.