Galaxy Resources Limited, weak market conditions continue to prevail the lithium sector
Team Veye | 21 Sep 2020 ASX - GXYGalaxy Resources Limited (ASX: GXY)
June 2020 Quarterly Activities Report
Sal de Vida advances to design phase & piloting underway Multi-year offtake extension executed at Mt Cattlin
Galaxy Resources Limited (ASX: GXY, “Galaxy” or the “Company”) is leveraging its portfolio of world-class development assets to create a sustainable, large scale, global lithium chemicals business. Galaxy on 23 July 2020 reported on activities undertaken in the June 2020 quarter and its financial position as at 30 June 2020.
(Chart source: TradingView)
Quarterly Highlights
COVID-19
- COVID-19 health and safety practices implemented organisation wide without incident
- Sal de Vida’s development schedule has been impacted but Stage One production in 2022 remains the target
- Mt Cattlin operations continued without major disruption and James Bay’s site based geotechnical program rescheduled for Q3
(Graphic Source – Company Reports)
Project Development
Sal de Vida, Argentina
- Front-end engineering design of the wellfield and ponds is underway and the process plant package is out for tender
- Process test work is yielding high quality primary lithium carbonate with a grade at the upper end of expectations
- Pilot plant commissioned and first piloting run was successfully completed post-quarter, with the second run scheduled in August
- Evaporation of brine in the pilot ponds is performing in line with process and atmospheric models
- Permitting is progressing with the granting of operational permits for the extraction of freshwater and the use of reagents
- Galaxy remains in a strong position to execute its growth strategy countercyclically and meet the forecast lithium demand surge (Data Source – Company Reports)
Veye’s Take
With increasing pressure on lithium prices, producers and developers are slowing or stopping new mines and expansion projects. Medium to long-term outlook remains attractive with significant stimulus packages in both the EU and China expected to drive an electric vehicle led lithium demand surge. Automakers remain committed to electrifying their fleets and many of the majors have recently reinforced their relationships with tier 1 battery manufacturers. Additionally, converters are securing feedstock for the medium term and expanding their production capacity. Galaxy is in a strong position to deliver Sal de Vida to the market in time for a forecast lithium demand surge. The stock had broken out of the downtrend and started trading above daily and monthly support areas above $1.385. It can have the potential to continue moving up and grow significantly in the medium to long term. Veye maintains a "Buy" on “Galaxy Resources Ltd” at the current price of $1.565
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