Lithium miner Altura Mining Limited [ASX:AJM] entered a trading halt this morning following the release of its quarterly reports yesterday.
Altura’s share price faired poorly yesterday after their quarterly update, continuing their downward slide shedding 3.33% to trade at 14.5 cents per share.
Altura Mining is focused on supply of lithium raw materials, with Altura Lithium Project at Pilgangoora and is a hard rock lithium product supplier. The company seeks to leverage what it perceives as an increasing demand for lithium products.
What caused the trading halt?
Altura’s quarterly reports indicated it is in a rather precarious position financially. Although it managed to beef up its cash flows from last quarter, it’s the cash — or lack thereof — that has both investors and the company concerned.
Despite reporting net cash for the quarter ending December 2018 of around $13 million, Altura ended the year with only $9 million left in cash. About $1.5 million less than the previous quarter.
With about $46 million due next quarter, including $13.9 million in interest payments, Altura has likely entered the trading halt to devise a capital raising scheme.
Altura will commence normal trading on Monday or Tuesday of next week, likely with a proposed capital raising. However, whether the stock will be sold at a premium or discount is unclear.
Is there any good news for Altura’s share price?
Although their quarterly cash flow report for December 2018 seems grim, the company received payment for its fourth shipment of product to China in early 2019.
With each of the four shipments averaging around 6,000 metric tonnes, Altura likely received around $4 million for this round of shipments — helping alleviate financial pressure.
AJM future cash flows show promise. In November last year Altura signed a binding offtake agreement for a minimum of 70,000 tonnes annually, giving them a more predictable income.
This year the company is also looking to stabilise and ramp up production at its mine.
If Altura do emerge from the trading halt with a capital raising scheme, they might do to wipe off their existing debt and help put to bed any funding issues.
If this is the case, we might see the company fast track stage 2 of their operation, which will see mine capacity expanded to 440,000 tonnes per annum.
For Money Morning
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