The Mineral Resources Limited (ASX: MIN) share price has been one of the worst performers on the ASX 200 on Wednesday.
At one stage today the mining and mining services company’s shares were down as much as 9% to $14.12.
They have since recovered some of this decline but are still down 5% to $14.75 in afternoon trade.
Why did Mineral Resources’ shares crash lower today?
Investors were quick to hit the sell button this morning after The Australian reported that the company has been blocked from starting the commissioning of the next stage of its Wodgina lithium project after regulators found that a tailings dam was seeping into groundwater.
The report claimed that the Western Australian Department of Water and Environmental Regulation (DWER) has refused to approve the commissioning of a second train at Wodgina until it is able to demonstrate that it has reduced seepage and improved the performance of the existing operation.
This afternoon Mineral Resources clarified the situation at Wodgina, advising that it has received an amendment notice in relation to its lithium plant.
According to the release, the DWER has requested further information about the water balance at the project before it will permit commissioning of the second train to commence.
Management advised that it is working with the DWER to provide it with this information, which it expects to do within the week.
Until approval is received from the department, Train 2 commissioning will be limited to running water. However, these discussions are not expected to have any material impact on the project or on the company’s financial position.
It also stressed that the tailings dam is functioning as expected and engineered. Advising that tailings dams are designed to account for seepage and the initial rates of seepage at Wodgina are in line with the company’s expectations for the establishment of this dam.
It also revealed that there are over two hundred and fifty million tonnes of lithium-bearing ore in the vicinity of the site and that impurities in the water continue to be in line with expectations.
Elsewhere in the industry, the Galaxy Resources Limited (ASX: GXY) share price is down almost 6% after being downgraded by Citi and the Syrah Resources Ltd (ASX: SYR) share price has dropped lower following a disappointing second quarter update.
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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019