LONDON (Alliance News) - Cadence Minerals PLC on Thursday said it swung to loss in 2018 due to a poor performance of lithium company shares prices, hurt by long-term softening in the lithium price.
The mining investment company said it swung to a pretax loss of GBP11.8 million in 2018 from GBP1.2 million profit reported a year earlier, due to realised and unrealised losses of GBP9.4 million relating to the investment portfolio.
The lithium market has softened considerably during the year with the Global X lithium ETF dropping by 30% in 2018, Cadence Minerals noted, saying it was not "immune" to this price weakness. Shares in its two principal investments, Bacanora Lithium PLC and European Lithium Ltd, declined in price by 77% and 56%, respectively.
This, in turn, was reflected in Cadence's own share price performance, which lost 62% during 2018. Cadence Minerals shares were trading 1.8% lower on Thursday at 0.14 pence each. Fellow London-listed Bacanora Lithium was down 0.1% to 26.74p.
"There has been increasing downward pressure on the lithium price and therefore the global sector, mostly due to expectations that supply is increasing," said Non-Executive Chair Andrew Suckling.
"Cadence fully believes the prospects are growing, and we have weathered a very difficult period and are embarking on an exciting phase with the investment into the iron ore market," added Suckling.
On Tuesday last week, Cadence said it had entered into non-binding heads of terms with IndoSino Pte Ltd to acquire a 27% interest in the Amapa iron ore mine for USD6 million. The total historic mineral resource of the mine is an estimated 348 million tonnes of ore at 3.9% iron content.
Initial revenue from the project is expected to start in the fourth quarter of 2019, from the sale of iron ore stockpiles. Mining operations are expected to re-start in 2021.
