TSX : TLH
November 2011
PERTH, WESTERN AUSTRALIA--(Marketwire - Nov. 14, 2011) - Talison Lithium Limited ("Talison" or the "Company") (TSX:TLH) today announced results for the first quarter of the 2012 fiscal year.
HIGHLIGHTS
- Sales volumes for the first quarter of 80,315 tonnes of lithium concentrate (approximately 12,000 tonnes lithium carbonate equivalent ("LCE")), a 53% increase quarter on quarter1.
- Revenue of A$25.9m, a 61% increase in US$ terms quarter on quarter.
- Average sales price increased 5% and operating cost per tonne reduced 6% quarter on quarter.
- Earnings before interest, income tax, and depreciation and amortization ("EBITDA") of A$6.1 million2 and EBITDA margin of 24%.
- Operating cash flow of A$8.2 million.
- Cash and cash equivalents at September 30, 2011 of A$91.3 million.
- Construction of the Stage 2 expansion of the Greenbushes Lithium Operations to double production capacity continued during the quarter on schedule and on budget.
- New Offices in Shanghai and Santiago established to strengthen relationships with customers and facilitate the development of the Salares 7 Project, respectively.
Talison generated revenue of A$25.9 million in the quarter. In US$ terms, sales revenue was 61% higher than Q1 fiscal year 2011 (excluding one-off crushed ore sales in Q1 fiscal 2011) however, in A$ terms sales revenue increased only 23% as a result of the adverse impact of a 16% increase in the value of the A$ against the US$ between the two periods.
Talison sold 80,315 tonnes of lithium concentrate during the quarter (approximately 12,000 tonnes LCE), a 53% increase quarter on quarter. Production volume increased 12% quarter on quarter to 90,708 tonnes of lithium concentrate (approximately 13,500 tonnes LCE) as the Company realized the full benefits of the completion of its Stage 1 capacity expansion of the Greenbushes Lithium Operations.
Cash operating cost of goods sold per tonne of lithium concentrate was A$207, a 6% reduction quarter on quarter due to economies of scale as production capacity increased.
EBITDA was A$6.1 million, reflecting an increase in the EBITDA margin to 24% of revenue despite a 16% appreciation in the value of the A$. A constant exchange rate would have resulted in an EBITDA margin of approximately 33%, reflecting the increase in average sales price and reduction in cash operating cost of goods sold during the quarter.
The table below summarizes the Company's key financial metrics for Fiscal Q1 2012.
| FISCAL Q1 2012 RESULTS SUMMARY | ||||||||
| (In thousands and A$ unless noted otherwise) | ||||||||
| Q1 FY 12 | Change | Q1 FY 11 | ||||||
| Sales Volume (tonnes lithium concentrate) | 80,315 | 53 | % | 52,525 | ||||
| Average sales price | US$330 | 5 | % | US$313 | ||||
| Revenue | $ | 25,879 | 23 | % | $ | 21,072 | ||
| Cash Operating COGS/tonne | $ | 207 | -6 | % | $ | 221 | ||
| EBITDA | $ | 6,126 | 28 | % | $ | 4,770 | ||
| EBITDA Margin | 24 | % | 4 | % | 23 | % | ||
| Net fair value gain/(loss) on revaluation of financial assets and liabilities3 | (6,419 | ) | -206 | % | 6,067 | |||
| Net finance income/(expense) – other | 3,336 | 841 | % | (450 | ) | |||
| Depreciation and amortisation | (688 | ) | -16 | % | (820 | ) | ||
| Income tax expense | (748 | ) | -80 | % | (3,693 | ) | ||
| Net Income | $ | 1,607 | -73 | % | $ | 5,874 | ||
| Basic EPS | $ | 0.02 | -82 | % | $ | 0.11 | ||
| Shares | 107,731 | 101 | % | 53,569 | ||||
| Additional Data | ||||||||
| Volume sold LCE | 12,000 | 53 | % | 7,800 | ||||
| Production LCE | 13,500 | 12 | % | 12,000 | ||||
During the quarter Talison continued to progress its three growth projects.
Stage 2 Expansion
To view "Figure 1: Stage 2 expansion progress at Greenbushes",please visit the following link: http://media3.marketwire.com/docs/TalisonFigure1.pdf.
Minerals Conversion Plant
Salares 7 Project
New offices opened in Shanghai and Santiago
During the quarter, Talison opened an office in Shanghai to support its growing business in China. The new office will assist the Company in strengthening relationships with new and existing customers.
Talison has also established an office in Santiago to facilitate the development of the Salares 7 Project. This office will support the exploration, environmental and process test work currently being undertaken by the Company in Chile.
FISCAL 2012 OUTLOOK
Talison expects production of lithium concentrate in fiscal Q2 2012 to be in-line with that of fiscal Q1 2012. The Company expects sales of lithium concentrate for the six months to December 31, 2011 to be in line with production. Talison secured price increases for two shipments in fiscal Q1 2012 and expects further positive price movements for sales in calendar 2012.
During fiscal 2012, Talison expects production and sales volumes to remain constrained until commissioning of the Stage 2 expansion in fiscal Q4 2012. Because the commissioning is expected to occur late in the year, the additional production capacity will not impact sales until fiscal 2013. However, the full year of contribution from the Stage 1 Expansion, combined with anticipated process improvements, should enable full year 2012 sales to approximately equate to fiscal Q4 2011 sales on an annualized basis.
FIRST QUARTER FINANCIAL RESULTS CONFERENCE CALL
Talison will host a conference call to discuss the financial results on Monday, November 14, 2011 at 8:00 a.m. (Eastern). The call is being webcast by Thomson Reuters and can be accessed at www.earnings.com or at Talison's website, www.talisonlithium.com.
| Teleconference call details are as follows: | |
| North America: | +1 (866) 270-6057 |
| International: | +1 (617) 213-8891 |
| Participant Code: | 78443753 |
| Chairperson: | Peter Oliver, Chief Executive Officer and Managing Director |
| Replay | |
| Available from: | November 14, 2011, 11:00 a.m. (Eastern) |
| Available to: | November 21, 2011 |
| Dial In: | +1 (888) 286-8010 |
| International: | +1 (617) 801-6888 |
| Passcode: | 90648347 |
Talison is a leading global producer of lithium. Talison mines and processes the lithium bearing mineral spodumene at the Greenbushes Lithium Operations in Western Australia. In addition, Talison explores for lithium at the Salares 7 lithium project made up of seven salars (brine lakes and surrounding concessions) located in Region III, Chile. Talison has an extensive, well established global customer network and a leading position in the growing Chinese market.
- Information in this press release is in relation to the financial condition and results of operations of Talison Lithium Limited ("Talison" or the "Company") as at September 30, 2011 and for the three months ended September 30, 2011. This press release should be read in conjunction with the unaudited condensed consolidated interim financial statements of Talison and the related notes thereto as at September 30, 2011 and for the three months ended September 30, 2011 (collectively, the "Financial Statements"). The financial information contained in this press release is derived from the Financial Statements, which were prepared in accordance with International Financial Reporting Standards ("IFRS"). All amounts in this press release are expressed in Australian dollars ("A$") unless otherwise identified. References to "C$" are to Canadian dollars and references to "US$" are to United States dollars.
- The term "EBITDA" is a non-IFRS financial measure. For a reconciliation of EBITDA to its IFRS-compliant income statement, refer to "Non-IFRS Performance Measures" in Management's Discussion and Analysis of the financial condition and results of operations of Talison Lithium Limited as at September 30, 2011 and for the three months ended September 30, 2011 (which can be found on Talison's SEDAR profile at www.sedar.com).
| INCOME STATEMENT | Three Months Ended September 30, 2011 (Unaudited) | Three Months Ended September 30, 2010 (Unaudited)(1) | Twelve Months Ended June 30, 2011 (Audited)(1) | |||
| A$'000 | A$'000 | A$'000 | ||||
| Sales revenue | 25,879 | 21,072 | 109,501 | |||
| Operating costs | (16,594 | ) | (13,235 | ) | (70,616 | ) |
| Other income / (expenses) | (3,159 | ) | (3,067 | ) | (14,819 | ) |
| EBITDA(3) | 6,126 | 4,770(2) | 24,066(2) | |||
| Depreciation and amortization | (688 | ) | (820 | ) | (3,428 | ) |
| Net financing income / (costs) | 857 | (3,859 | ) | (3,798 | ) | |
| Net realized US$ hedging gain | 2,048 | (40 | ) | 2,979 | ||
| Net realized foreign exchange gain / (loss) | 431 | 3,449 | 7,561 | |||
| Net fair value gain/(loss) on financial assets and liabilities | (6,419 | ) | 6,067 | 4,664 | ||
| Income tax (expense) / benefit | (748 | ) | (3,693 | ) | (9,108 | ) |
| Net profit/(loss) for the period | 1,607 | 5,874 | 22,936 | |||
| 25,879 | ||||||
| Basic earnings per share (cents/share)(4) | 1.5 | 11.0 | 25.7 | |||
| Diluted earnings per share (cents/share)(4) | 1.5 | 10.8 | 24.9 | |||
| Basic weighted average number of shares | 107,730,822 | 53,569,136 | 89,321,871 |
| Notes: | |
| (1) | The financial results for the three months ended September 30, 2010 and twelve months ended June 30, 2011 are comprised of the results of Talison for the period from August 12, 2010 to September 30, 2010 and from August 12, 2010 to June 30, 2011 (i.e., post-Reorganization), respectively, and the carve-out results of the Greenbushes Lithium Operations for the period from July 1, 2010 to August 11, 2010 (i.e., pre-Reorganization). Readers are cautioned that the results for the period from July 1, 2010 to August 11, 2010 may not be reflective of the ongoing affairs of Talison. |
| (2) | EBITDA for the three months ended September 30, 2010 and twelve months ended June 30, 2011 included A$1.6 million in non-recurring Reorganization costs. |
| (3) | EBITDA is a non IFRS financial measure. For a reconciliation of EBITDA to its IFRS compliant income statement, see "Non-IFRS Performance Measures". |
| (4) | Basic and diluted earnings per share have been calculated based on the weighted average number of shares on issue. For the three months ended September 30, 2011, the weighted average number of shares includes both the outstanding ordinary shares of Talison adjusted to remove ordinary shares held by the Talison Long Term Incentive Plan Trust which is consolidated under IFRS, and the exchangeable shares of Talison Lithium Exchangeco Limited, an indirect wholly-owned subsidiary of Talison that are exchangeable (on a one-for-one basis) for ordinary shares of Talison. For the three months ended September 30, 2010 and twelve months ended June 30, 2011, the weighted average number of shares includes the outstanding ordinary shares of Talison adjusted to remove ordinary shares held by the Talison Long Term Incentive Plan Trust which is consolidated under IFRS, the exchangeable shares of Talison Lithium Exchangeco Limited that are exchangeable (on a one-for-one basis) for ordinary shares of Talison, and the ordinary shares of Talison Minerals adjusted for the Talison Minerals share consolidation which occurred as part of the Reorganization. See "Outstanding Share Data". |
| STATEMENT OF FINANCIAL POSITION | As at September 30, 2011 (Unaudited) A$'000 | As at June 30, 2011 (Audited) A$'000 |
| Assets | ||
| Cash and cash equivalents | 91,341 | 102,605 |
| Trade and other receivables | 20,884 | 21,543 |
| Inventories | 13,955 | 11,182 |
| Derivative financial instruments | 3,638 | 10,205 |
| Deferred tax assets | - | - |
| Property, plant and equipment | 111,861 | 95,215 |
| Exploration and evaluation assets | 62,346 | 61,714 |
| Total assets | 304,025 | 302,464 |
| Liabilities | ||
| Trade and other payables | 10,377 | 12,380 |
| Interest-bearing liabilities | 31,576 | 29,243 |
| Tax payable | 2,005 | - |
| Provisions | 14,246 | 14,668 |
| Derivative financial instruments | 1,030 | - |
| Deferred tax liabilities | 8,043 | 10,622 |
| Total liabilities | 67,277 | 66,913 |
| Shareholders' equity | 236,748 | 235,551 |
| As at September 30, 2011 (Unaudited) A$'000 | As at June 30, 2011 (Audited) A$'000 | |||
| Outstanding number of shares | ||||
| Ordinary shares of Talison | 110,987,326 | 110,527,347 | ||
| Exchangeable shares of Talison Lithium Exchangeco Limited(1) | 1,083,192 | 1,494,239 | ||
| Shares held in trust(2) | (4,299,367 | ) | (4,299,367 | ) |
| Total outstanding number of shares | 107,771,151 | 107,722,219 |
| Notes: | |
| (1) | The exchangeable shares of Talison Lithium Exchangeco Limited are exchangeable (on a one-for-one basis) for ordinary shares of Talison. See "Outstanding Share Data". |
| (2) | On June 7, 2011, Talison Lithium established the Incentive Plan Trust. Talison Lithium issued 3,862,767 ordinary shares to the Incentive Plan Trust and the Incentive Plan Trust purchased 436,600 ordinary shares of Talison Lithium on-market. |
Certain information contained in this press release, including any information as to Talison's mineral reserve and mineral resource estimates, strategy, projects, plans, prospects, future outlook, anticipated events or results or future financial or operating performance, may constitute "forward-looking information" within the meaning of Canadian securities laws. All statements, other than statements of historical fact, constitute forward-looking information. Forward-looking information can often, but not always, be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "predicts", "potential", "continue" or "believes", or variations (including negative variations) of such words, or statements that certain actions, events or results "may", "could", "would", "should", "might", "potential to", or "will" be taken, occur or be achieved or other similar expressions concerning matters that are not historical facts. The purpose of forward-looking information is to provide the reader with information about management's expectations and plans. Readers are cautioned that forward-looking statements are not guarantees of future performance. All forward-looking statements made or incorporated in this press release are qualified by these cautionary statements.
Forward-looking statements are necessarily based on a number of factors, estimates and assumptions that, while considered reasonable by Talison, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such factors, estimates and assumptions include, but are not limited to: anticipated financial and operating performance of Talison, its subsidiaries and their respective projects; Talison's market position; future prices of lithium or lithium concentrates; estimation of mineral reserves and mineral resources; realization of mineral reserve and mineral resource estimates; timing, amount and costs of estimated future production; grade, quality and content of concentrate produced; sale of production; capital, operating and exploration expenditures; costs and timing of the expansion of the Greenbushes Lithium Operations; exploration and development of the Salares 7 lithium project; costs and timing of future exploration; requirements for additional capital; government regulation of exploration, development and mining operations; environmental risks; reclamation and rehabilitation expenses; title disputes or claims; absence of significant risks relating to Talison's mining operations; the costs of Talison's hedging policy; sales risks related to China; currency; interest rates, and limitations of insurance coverage. While Talison considers these factors, estimates and assumptions to be reasonable based on information currently available to it, they may prove to be incorrect and actual results may vary.
Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Talison and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such risk factors include, amount others, those described in the Financial Statements and under the heading "Risk Factors" in the annual information form of Talison for the year ended June 30, 2011 dated September 23, 2011, each of which can be found on Talison's SEDAR profile at www.sedar.com. While Talison considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect and actual results may vary.
Although Talison has attempted to identify statements containing important factors that could cause actual actions, event or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking information contained herein is made as of the date of this press release based on the opinions and estimates of management on the date statements containing such forward-looking information are made. Except as required by law, Talison disclaims any obligation to update any forward-looking information, whether as a result of new information, estimates or opinions, future events or results or otherwise. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.
| 1 | Quarter on Quarter refers to First Quarter Fiscal Year 2012 as compared to First Quarter Fiscal Year 2011 | |||||
| 2 | The term "EBITDA" is a non-IFRS financial measure. For further information and a reconciliation of EBITDA to its IFRS-compliant income statement, refer to "Non-IFRS Performance Measures" in Management's Discussion and Analysis of the financial condition and results of operations of Talison Lithium Limited as at September 30, 2011 and for the three months ended September 30, 2011 (which can be found on Talison's SEDAR profile at http://www.sedar.com/). | |||||
| 3 | This amount mainly represents unrealized losses on the revaluation of Talison's US$hedge book and US$senior debt to the spot A$/US$exchange rate at September 30, 2011. The spot A$/US$exchange rate reduced from 1.07 at June 30, 2011 to 0.97 at September 30, 2011 resulting in the unrealized revaluation loss. The spot A$/US$exchange rate at November 10, 2011 has recovered to 1.02 which results in a portion of the unrealized revaluation loss being reversed at that date.Contact InformationTalison Lithium Limited Gary Dvorchak, CFA +1 (310) 954-1123 gary.dvorchak@icrinc.com |
