(Reuters) - Australia's Galaxy Resources <GXY.AX> on Wednesday flagged a non-cash impairment charge of $150 million to $185 million for the first half of 2019, in the latest sign of woes befalling the raw materials sector for electric vehicles.
The impairment announcement follows a review of the inventory of lithium concentrate it holds at its flagship Mount Cattlin mine in Western Australia, the costs it attributed to its purchase of the mine's previous owner General Mining Ltd and tax losses, the lithium miner said in a statement to the Australian Stock Exchange.
The final amount of the charge will be announced during first half results released at the end of August, the company said.
The charge reflects a downgrade to asset values of the plant, equipment and reserves made when Galaxy bid for General Mining in May 2016, said Warren Edney, an analyst at Ballieu Holst in Melbourne.
Since then market conditions for lithium have worsened which will also likely have led to lower carrying value for stockpiles, he said adding that the quality of the acquired assets may have missed expectations.
Prices for lithium carbonate, which is typically used by suppliers to the battery industry, have halved from mid-2016, while lithium concentrate spodumene prices have slumped to $600 from more than $950 at the start of last year. <AM-99C-LTCB> <AM-LI2O5CCN-SPO>
"In reality, it won't make any difference to the cash flow... it will just have a one off impact to the (profit and loss)," he said.
Shares in Galaxy fell by as much as 1.8% to A$1.085 on Tuesday, the weakest in more than three years and less than a quarter of their price in early 2018.
(Reporting by Shriya Ramakrishnan in BENGALURU and Melanie Burton in MELBOURNE; editing by Christian Schmollinger)
