Elevra Lithium Posts Record Production, Closes Legacy Pricing Drag

Elevra Lithium delivered a record production month in May and secured full funding for its North American Lithium expansion. But the June quarter numbers tell a more complicated story: revenue fell 61% from the prior quarter as the company made its final deliveries under a legacy offtake contract that locked in prices well below spot.

All 33,977 dry metric tonnes of spodumene concentrate sold in the quarter were subject to that lagged pricing mechanism, which referenced historical lithium hydroxide prices. The average realised price came to US$921 per tonne FOB. That contract is now fully satisfied. Elevra said future pricing should align more closely with spot spodumene values.

Production itself was strong. The mill processed 358,806 tonnes of ore, up 4% quarter on quarter. Mill utilisation hit 92%, down slightly from the record 94% in the March quarter because of a planned shutdown in April. Lithium recoveries improved to 71%, a 5 percentage point gain, helped by better feed grade and process modifications. The company produced 54,479 dmt of spodumene concentrate at an average grade of 5.0%.

Revenue came to US$31 million, down from US$79 million in the prior quarter. The drop reflected both the pricing drag and a 39% decline in tonnes sold, partly due to shipping schedules. Elevra ended the quarter with 40,863 dmt of finished goods stockpiled, in transit or at port. A shipment of about 32,500 dmt is expected in July, with another by the end of the quarter.

Unit operating costs per tonne sold rose 3% to US$907, reflecting the release of higher-cost inventory. Controllable costs increased 16% quarter on quarter, broadly in line with higher production. The company reported a small profit from operations of US$1 million at NAL, but an operating cash outflow of US$50 million driven by working capital movements – higher trade receivables of US$30 million and finished goods inventories of US$18 million.

The strategic financing package was the quarter's defining corporate event. Elevra raised US$196 million through an institutional placement and secured US$102 million in convertible notes from Canada Growth Fund. An additional US$11 million came from a share purchase plan. The proceeds fully fund the staged NAL brownfield expansion, which is expected to increase production capacity and lower unit costs. An updated scoping study put the incremental post-tax net present value of the expansion at C$969 million, more than double the previous estimate.

The company also divested its interest in the Ewoyaa Project in Ghana to Huayou for about US$71 million in cash, closing expected in the first quarter of fiscal 2027. Elevra said the sale simplifies its corporate structure and lets it focus on its North American portfolio.

Cash and cash equivalents ended the quarter at US$255 million, up US$142 million, with net cash of US$200 million. The prepayment facility stood at US$55 million, reduced by US$9 million in July.

At the Moblan project, permitting remains the critical path. Elevra completed the purchase and termination of an existing offtake agreement held by Waratah Capital Advisors, regaining full control of Moblan's attributable production. Work has begun on updating the 2024 definitive feasibility study to reflect the expanded mineral resource.

Elevra's Alpha Score sits at 46 out of 100, a Mixed rating, reflecting the gap between strong operational execution and the financial drag from legacy contracts that are now behind it.

The next catalyst is the July shipment of roughly 32,500 dmt, which should give a clearer picture of the company's ability to capture spot prices.