May 14th 2015
Corporate
AFSL: 259730
Galaxy Resources Ltd (GXY) LITHIUM COMPOUNDS - POWER
Capital GXY - CapitalStructure Structure
TO THE
PEOPLE
Investment Drivers
C ode Shares Special shares Notes * ITM Options
GXY 1064.8 m. 14.1 600 @ $100K
[email protected] 37.0 m. Av $0.05 1115.9 m. C ash (est) -$ 14 m. Price $ 0.036 per share Market C ap'tln $ 38 m. EV (est) $ 52 m. * Likely to be restructured
Galaxy has a clean balance sheet supported by A$62.4 million of
Valuation
The company has negotiated a 3-year, $2.5 million pa lease and
Asset A$m Hardrock Li 29 Sal De Vida 60 Net cash * 16 Risked Exploration 5 Total 110 * Including new equity
$/shr $0.015 $0.030 $0.008 $0.003 $0.055
Galaxy is positioned to be a low cost supplier of lithium
compounds into an expanding lithium-ion battery market from its 96% owned Sal de Vida lithium brine project in Argentina. Demand for lithium compounds for use in batteries directed at consumer goods, communications and computing is forecast at a rate of over 4% pa over the medium term and should rise to 7% pa once sales of storage batteries along with hybrid and electric vehicles accelerate in the early 2020’s. royalty agreement over its Mt Catlin Li-Ta mine in Western Australia, which is currently gearing up for production. Sale of spodumene by-product is likely to lift revenue in 2016.
Galaxy is examining a lower cost, possibly 8,000 tonne pa LCE start-up at Sal de Vida costing ~US$122 million, with a later expansion to 25,000 tpa plus addition of a potash recovery circuit, as the market expands and product gains market acceptance.
Galaxy is a lithium focused growth story, trading at a discount
Source: Strachan Corporate
Board Martin Rowley Anthony Tse Charles Whitfield Jian-Nan Zhang
convertible note debt and ~A$50 million of cash with which to progress development of its Sal de Vida project.
Chairman Managing Director Exec Director Non-Exec Director
it’s to more advanced peers. Strachan Corporate expects that the stock will be re-rated as cash flow from Mt Cattlin is established, along with reduction in the technical and funding risks at Sal de Vida, through a clear path to start-up using a development funding partnership.
Galaxy continues to have the support of major shareholders, as well as Acorn Capital, Deutsche Bank and Geologic.
Opinion*
Galaxy Resources is restoring its balance sheet, holding about $50 million of cash while refinancing a convertible note facility. The company is establishing a lease fee and royalty stream from third party operations at its Mt Cattlin Ta/Li mine with potential significant revenue from spodumene sales to follow. Development of a low cost, lithium and potash brine project at its 96% held Sal de Vida project in Argentina will place Galaxy well down the cost curve as a competitive supplier of lithium compounds to an expanding market for Li-ion batteries.
Expansion opportunities and a long life project position Galaxy as a major player in this rapidly growing industry. Peter Strachan. *No recommendation is offered for this commissioned research.
Strachan Corporate: 15 Florence St, Cottesloe, WA, Australia, 6011
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May 14th 2015
STRACHAN CORPORATE
AFSL 259730
Introduction Lithium focus
Demand growth for lithium-ion batteries expected to support price of lithium compounds…
... Lithium carbonate price rises by ~20% over past year
In mid 2012 Galaxy Resources merged with Canadian lithium developer Lithium One to create a significant force in the lithium supply chain. Following the sale of its Jiangsu lithium carbonate plant in northern China, the company’s main focus is developing a 96% owned, l
