Livium’s Strategic Shift Faces Execution Risks Amid Market and Volume Volatility

Strong Financial Momentum in Battery Recycling

Livium Ltd (ASX:LIT) has delivered a robust quarterly performance for the period ending December 2024, highlighted by a remarkable 179% increase in gross profit from its battery recycling operations. The subsidiary Envirostream Australia Pty Ltd reported a gross profit of approximately A$0.6 million on revenues of A$1.3 million, achieving a gross margin of 43%. This improvement underscores the success of Livium's strategic shift to an upstream 'fee for service' model, which secures upfront revenue and enhances profitability despite seasonal volume fluctuations.

The company’s focus on large-format lithium-ion batteries (LIBs), which comprised about 65% of total collections this quarter, has driven higher margin opportunities. Although collection volumes dipped slightly due to seasonal factors, the first half of FY25 saw a 138% increase in large-format LIB collections compared to the prior year, reinforcing Livium’s capacity to meet growing end-of-life battery supply.

Expanding Strategic Partnerships and Government Support

Livium has diversified its battery recycling feedstock through new exclusive agreements with industry leaders Wabtec, Infinitev, and ReSource. These partnerships complement existing contracts with major OEMs such as BYD Auto, LG Energy Solution, Volvo Bus, and Hyundai Glovis, broadening the company's access to diverse lithium-ion battery sources.

Further bolstering its growth trajectory, Livium secured a grant of approximately A$850,000 from the Western Australian government to support the development of a new battery recycling facility in WA. This funding aligns with Livium’s strategic objective to establish nationwide collection, sorting, and storage capabilities, positioning the company to capitalize on the expanding battery waste market.

Advancements in Lithium Extraction Technology

Significant progress was made under the Joint Development Agreement (JDA) with Mineral Resources Ltd (MinRes) for Livium’s patented LieNA® lithium extraction technology. The quarter marked the completion of Stage 1 activities, including pilot plant operation, lithium phosphate refinement, and a demonstration plant engineering study.

Looking ahead, Livium and MinRes have agreed to extend the JDA to undertake Stage 1A activities, focusing on optimizing commercialisation pathways and potentially producing battery-grade lithium carbonate. These activities will be fully funded through MinRes’ convertible note and R&D tax incentives, with the convertible note maturity extended to September 2025. Successful completion will lead to the formation of a 50:50 joint venture, LieNA Pty Ltd, to license the technology and capture royalties, potentially expanding Livium’s addressable market significantly.

Defining the Battery Materials Demonstration Plant

Livium’s Battery Materials division, VSPC, has identified Australia as the preferred location for its demonstration plant to produce lithium ferro phosphate (LFP) and lithium manganese ferro phosphate (LMFP). This small-scale, capital-efficient plant aims to meet customer qualification requirements and secure binding offtake agreements, serving as a critical step towards a full-scale production facility with a projected capacity of 25,000 tonnes per annum.

The company projects that a full-scale plant could generate annual revenues of approximately US$319 million, assuming an LFP price of US$12.75/kg. Livium is actively pursuing non-dilutive government funding and private strategic partnerships to finance this development, aiming to minimize shareholder dilution while maximizing stakeholder value.

Corporate and Governance Updates

Reflecting its strategic evolution, the company formally changed its name from Lithium Australia Limited to Livium Ltd, symbolizing a broader commitment to sustainable critical materials and a circular economy. At quarter-end, Livium held cash and listed investments totaling A$5.6 million, supported by R&D tax incentive rebates and the sale of its remaining 30% interest in the Bynoe Lithium Project.

In governance developments, Non-Executive Chair George Bauk resigned post-quarter to pursue an executive role elsewhere, with Non-Executive Director Phil Thick stepping in as acting Chair during the board’s search for a permanent replacement.

Outlook

Livium’s December quarter results demonstrate a company transitioning effectively from mining to a technology-driven battery materials and recycling business. With strong financial metrics, strategic partnerships, government backing, and advancing proprietary technologies, Livium is well-positioned to capitalize on the accelerating global demand for sustainable lithium supply chains.