Demand for Galaxy’s lithium product runs hot
Summary: Continued strength in lithium demand could see Galaxy Resources tap resources at its Mt Cattlin operations near Ravensthorpe it has previously considered uneconomic.....
Speaking to analysts on its quarterly earnings call yesterday, Galaxy chief operating officer Mark Pensabene said work was taking place to review pit design at Mt Cattlin, with the market for its offtake continuing to run hot.
“We do have a pretty robust plan in place to redo the way we do mining down there, because... the pricing has changed significantly,” he said.
“We do think given the way that the market is for offtake, we probably can take some lower intake into the plant or some lower head grade, and concentrate it up. We are re-optimising that as we speak and I know in the next quarter we should see the results of that.”
Managing director Anthony Tse said strong production and sales projections for electric vehicles in China were likely to drive demand and deliver high offtake prices as the market developed.
“From Galaxy’s perspective it is still very strong and robust,” Mr Tse said.
“It’s probably a little bit too early for pricing in 2018, but if we look at where we are at the end of the first quarter compared to the end of the fourth quarter last year ... I think the outcome is still reasonably positive in terms of lithium demand and pricing.”
But he showed no concern at the prospect of companies directly shipping ore to offtake partners in China cutting into demand for the upstream processed lithium concentrate Galaxy ships out of the Port of Esperance, a day after Chris Ellison’s Mineral Resources announced it had started direct shipping from its Wodgina mine in the Pilbara.
“In short, customers and converters in China are still very focused on our ability to provide concentrate,” he said. Galaxy produced 23,467t of concentrate from its Mt Cattlin operations on WA’s south coast in the first quarter, while it continues to look at options for development and exploration at its Sal De Vida brine project in Argentina and its James Bay project in Quebec, Canada.
It made $7,481,000 in customer receipts in the first quarter of 2017 after two shipments of lithium concentrate.
But it will clear its pre-payment obligations after the next shipment later this month, with future shipments to deliver direct cash flow to the company from its 2017 contracts. It is also looking at capital works to optimise plant throughput and recoveries, after hitting nameplate capacity of 210tonnes per hour last month.
Galaxy brought the mothballed Mt Cattlin lithium mine back into production last year with the help of General Mining, which it then bought out for $217 million.
Galaxy shares fell 0.5¢, or 1.2 per cent, to 41¢ at yesterday’s close.