- Galaxy Resources (GXY) announces a quarter-on-quarter increase in production from the Mt Cattlin Lithium Project in the June quarter
- The WA-based project had record quarterly production of 63,321 dry metric tonnes (dmt) of spodumene concentrate at 5.7 per cent lithium dioxide
- Due to the sustained high production rate, Galaxy has increased its full year production guidance to 195,000 to 210,000 dmt
- Further, development and early construction works progressed at the Sal de Vida Project in Argentina with first production slated for 2022
- Galaxy rounded off the quarter with a healthy US$208 million (A$283 million) in cash and equivalents and no debt
- GXY shares are up 10.8 per cent to trade at $4.43; proposed merger partner Orocobre (ORE) shares are up 10.1 per cent at $7.67 at 12:07 pm AEST
Galaxy Resources (GXY) has announced a quarter-on-quarter increase in production from the Mt Cattlin Lithium Project in the June quarter.
The Western Australia-based project achieved a record quarterly production of 63,321 dry metric tonnes (dmt) of spodumene concentrate at a grade of 5.7 per cent lithium dioxide. This compares favourably to the 46,588 dmt produced in the March quarter.
The June quarter production takes the total amount produced for the second half of FY21 to 109,909 dmt. The company attributes the production increase to favourable head grade and improved plant utilisation and processing rates.
Due to the sustained high production rate, Galaxy Resources increased its full year guidance in early June. The company's 2021 guidance rose from 185,000-200,000 to 195,000-210,000 dmt.
In terms of sales, the billion-dollar stock shipped 48,499 dmt of spodumene concentrate at a grade of 5.8 per cent. A 15,000 wet metric tonne (wmt) shipment was planned for the quarter but slipped into July due to port congestion. This shipment and a 16,500 wmt shipment was fulfilled this month.
Free-on-board unit cash operating costs fell 17 per cent to US$328 (A$446) per dmt. In line with the updated full year guidance, the unit cash cost is expected to increase to between US$420 and US$450 (A$572 and A$613) per dmt.
Sal de Vida
Galaxy Resources also focused on developing its Sal de Vida Project in Argentina which is designed to produce battery-grade lithium carbonate through an evaporation and processing operation.
Sal de Vida is targeting an initial annual production rate of 10,700 tonnes which will expand to around 32,000 tonnes per annum. First production is expected in 2022.
So far, Galaxy has completed and installed five out of eight wells and is assessing tender submissions for pond earthworks and liner installation. Pilot activities successfully produced battery-grade lithium with lower impurities, as well as the expansion of an accommodation camp and nearby primary school was completed.
Merger with Orocobre
In April, the company entered an agreement with fellow ASX-lister, Orocobre (ORE), through which the companies will merge through a scheme of arrangement.
The scheme will see Galaxy's shareholders receive 0.569 ORE shares for each GXY share held at the scheme record date. Once implemented, Orocobre shareholders will own 54.3 per cent of the fully diluted share capital of the combined entity and Galaxy shareholders will own the remaining 45.7 per cent.
Orocobre will acquire all the shares in Galaxy subject to Galaxy's shareholders and the Supreme Court of Western Australian giving their approval, as well as other conditions.
The first hearing at the Supreme Court took place on July 2 and resulted in approval to have a meeting with Galaxy's shareholders and the dispatch of a scheme booklet and notice of scheme meeting. This meeting will be held on August 6.
During the June quarter, Galaxy spent around US$12 million (A$16.3 million) which mainly went towards development activities for the Sal de Vida Project.
Positively, the spodumene producer had US$208 million (A$283 million) in cash and equivalents by the end of the quarter and no debt.
GXY shares were up 10.8 per cent to trade at $4.43, while ORE shares were up 10.1 per cent at $7.67 at 12:07 pm AEST.