Galaxy Resources: Riding the wave

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 03 Apr 2017   Posted by admin


All images: Galaxy Resources.

By Elizabeth Fabri

IF there was one company that best exemplified the lithium boom of the last 12 months, Galaxy Resources would be it. In 2016, its share price rose 330 per cent, making it the highest performing stock of the ASX-200. This year, Galaxy maintains its position in the spotlight as production ramps up at its newly commissioned Mt Cattlin project.

The Mt Cattlin mine has been operated by Galaxy Resources since 2009, but was put on care and maintenance in 2013; a huge blow for the nearby Ravensthorpe community with 37 staff and 65 contract redundancies.

But after more than three years, times were looking up for the WA mining town with the revival of Mt Cattlin injecting welcome jobs, investment and ‘buzz’ into the region.

On 11 November 2016 Galaxy began ore commissioning at the Mt Cattlin processing facility and on 2 January sent off its first shipment of lithium concentrate from the project via the Port of Esperance to China.

The 10,000 tonne shipment marked a significant milestone for the company after a demanding year gearing towards the next phase of production.

This was bolstered by the confirmed 2017 lithium concentrate sales volume of 120,000t at between $US830 and $US905/t FOB, for product grade of 5.5 per cent to 6 per cent lithium oxide.

The mine alsorecommenced 24 hour production and  achieved improved grades and mica content specification below 5 per cent.


First shipments

 

Galaxy worked towards securing key approvals to export product from the Port of Esperance ahead of first production.

On 26 October 2016, the Department of Environmental Regulations and Southern Ports Authority gave Galaxy the green light it had been waiting for.

Galaxy had previously exported product from the SPA Port of Bunbury 483km from the project; but exporting through Esperance, 187km away, would cut the journey in half.

Galaxy also awarded Qube Holdings the haulage and port services contract to facilitate the loading of concentrate via its rotabox container rotating frame system.

“Obtaining the Esperance port license is a major milestone achieved in the ongoing preparation ahead of the start of production at Mt Cattlin in time for the first shipment later this year,” Galaxy Resources managing director Anthony Tse said at the time.

“We are also very pleased to be working with the Southern Port Authority and Qube Logistics in establishing a long term and mutually-beneficial partnership.”

Two days into the New Year, the first 10,000t shipment was loaded on the NY Trader1 bound for Lianyungang Port in China.

Valued at about $US6 million based on 2016 pricing, the shipment signalled Galaxy’s formal transition back to producer status.

“There has been a tremendous amount of hard work with some very long hours put in, under tight and challenging deadlines, to get the operations to the stage where they are at and to allow us to make our first shipment,” Mr Tse said.

On 1 March a second shipment of 14,000t of product was loaded on the MV Blessing vessel bound for Galaxy’s second customer in China, providing further confidence for investors.

Galaxy stated its spodumene concentrate was anticipated to exceed the 5.5 per cent lithium oxide specification, with about 2 per cent mica concentration and moisture levels below two per cent.

It said the Mt Cattlin processing plant redesign had been successful in producing a product specification that was exceeding expectations in both areas, and would now focus on further improving product quality with a target of 6 per cent lithium oxide and mica concentrations closer to 1 per cent.

 

 

Production ramp up

 

Now the first round of shipments had been ticked off, Galaxy was shifting its attention to Mt Cattlin’s production ramp up.

In December last year, Galaxy awarded the mining contract to Piacentini to facilitate ramp up works.

By the end of the 2017 calendar year, the company hoped to reach a guidance of 160,000t of lithium concentrate, to fulfil both the outstanding balance of 2016 contracted volumes and new contracted 2017 volumes.

In its December quarter report, Galaxy stated it intended to continue working on various optimisation initiatives throughout the year to improve production recovery rates above the primary targeted 50 per cent level.

“Galaxy will look to place any incremental future production volumes with existing and/or new customers, with the company already having experienced strong interest from a range of potential new offtaker customers since the restart of production,” it stated.

On 10 February, Galaxy announced it had reached 90 per cent of nameplate throughout with a peak feed rate at 95 per cent of design.

 

Further developments

 

At a recent investor presentation, Galaxy said the company was “well positioned” with near term production from Mt Cattlin, and cashflow to support the development of its Sal de Vida project in Argentina.

“Overall the lithium sector has been undercapitalised to date, in terms of required funding to build out new planned capacity to meet demand,” it stated.

Over the coming year, Galaxy would continue to focus on production at Mt Cattlin, begin site works and advance project financing evaluation and discussions at Sal de Vida, and an exploration and development program at James Bay in Canada to upgrade the existing resource to reserves.

In February the company raised $61 million to accelerate the development of its overseas projects and remained positive on the rapid growth in China’s demand from battery and energy storage segments.

It said China had a record breaking year in 2016, producing 517,000 new energy vehicles made up of 417,000 pure electric vehicles and 99,000 hybrids. Mt Cattlin was the “only new independent supplier of spodumene to other lithium converters in China.”

Mr Tse said overall he was pleased with the progress that was being made at Mt Cattlin.

“We are now moving into a stable operations phase at the project,” Mr Tse said.

“This steadier state coupled with some key operational appointments, will allow for more focus on our other world class development opportunities.”