The lithium miner said it will scale back mining operations at the Western Australian asset — with mined material output expected to be 40 percent lower next year.

After a review of operations and due to weak market conditions, Australia’s Galaxy Resources (ASX:GXY,OTC Pink:GALXF) has decided to reduce lithium output from Mount Cattlin in 2020.

The lithium miner, which owns and operates projects in Australia, Canada and Argentina, said it will scale back mining operations at the Western Australian asset.

Mined material output is forecast to be 40 percent lower next year, and concentrate production is expected to be maintained at 75 percent of the current rate.

“Galaxy is undertaking a review of Mt Cattlin operations to determine the optimal scale of operations in response to the market conditions currently being experienced in the lithium sector,” the company said in a press release on Thursday (October 24).

“The key drivers in this review are to prioritize value over volume, to ensure Mt Cattlin continues producing positive operating cash margin, preserving resource life and maintain balance sheet capacity for advancement of the company’s development portfolio.”

During the September quarter, Mount Cattlin produced 50,014 dry metric tonnes (dmt) of lithium concentrate grading 6 percent lithium oxide. The project’s total shipment volume hit 58,278 dmt of lithium concentrate — slightly missing its guidance of 60,000 to 70,000 dmt.

The company said that production volumes plus existing product stockpiles are expected to be enough to meet the requirements of contracted customers next year.

“As there will be no change in staff levels and contractors, production will be able to ramp back up to full rates promptly, when market conditions improve or as required by Galaxy’s customers,” Galaxy said.

Lithium miners and developers around the world have been hit by weaker market conditions, with prices continuing their downward trend in Q3.

Despite this short-term weakness, Galaxy said that looking ahead the medium- and long-term fundamentals for lithium remain largely unchanged.

Galaxy is currently mining pegmatite ore at Mount Cattlin and processes on site to produce a spodumene concentrate and a tantalum by-product. At full capacity, ore can be processed at a rate of 1.6 million tonnes per year with lithium oxide concentrate production of 180,000 tonnes per year.

In January, Galaxy upgraded Mount Cattlin’s resource by 42 percent. Total measured, indicated and inferred resources currently stand at 16.7 million tonnes for 214,400 tonnes of lithium.

Aside from Mount Cattlin, the ASX-listed company is developing the Sal de Vida lithium-potash brine project in Argentina and owns the James Bay lithium pegmatite project in Quebec, Canada.

On Thursday, shares of Galaxy Resources were trading down 1.76 percent in Sydney. The company’s share price has been struggling since the start of the year, down 61.82 percent year-to-date.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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