This article first appeared on InvestorIntel on the 12th December 2016. It features some of my thoughts on Galaxy Lithium and the latest shipping from Mt. Cattlin.
- 16 November– Galaxy Resources Limited (ASX: GXY) (“Galaxy”) commences ore commissioning and lithium concentrate production
- 22 November – Galaxy awards Mt. Cattlin Mining Contract
- 29 November– Galaxy nominates first vessel to ship its product for its first shipment
- And…7 December- Mt Cattlin begins 24 hour production and shipping!!
I’ve always loved the Galaxy story. Perhaps its because Galaxy’s lithium carbonate plant in Jiangsu was the first lithium carbonate plant I ever visited starting out on my own. This was back in 2010 and the cleantech world looked quite different; For starters the lithium story was fairly new, there were more than 45 lithium junior hopefuls, “Tesla” was not a household name and the term “Gigafactory” was a vague, far off concept- in fact, I’m not sure whether the phrase had even been coined. The Galaxy Jiangsu plant, which you can see in the photo, was mostly dust with the beginnings of a construction site and was at least eight months away from looking even remotely like a processing plant. (And still I drove excitedly for almost 3.5 hours on a slow Chinese bus to see it!)
Just three years later in 2013, Galaxy had fallen into the usual junior trap of being over-leveraged and unfocused. Consequently, the business lost market and shareholder support. Like so many junior mining companies, it was thought that Galaxy would disappear. By December 2013, Galaxy’s share price had tumbled to around $0.038 from around $0.42 a year earlier.
New management, renewed focus and fiscal discipline breathed new life into the company and today, we celebrate with them, their maiden shipment from Mount Cattlin and a share price of $0.51 that appears to be climbing. Talk about a turnaround story!
After seven turbulent years, the hard-work and dedication finally paid off when Galaxy awarded the contract for mining services at its Mt Cattlin site to Piacentini & Son Pty Limited (“Piacentini”). The last few weeks have been spent hurriedly processing 230,000 tonnes of blasted ore through the plant before full round-the-clock production was announced on 7th December. During this time, Galaxy instructed Mitsubishi Corporation to nominate their first shipping vessel to transport their initial output of lithium concentrate. The concentrates are being transported from the port of Esperance, where the refined product is being trucked this instant.
The lithium-ion battery sector is one of the largest consumers of lithium, currently estimated to constitute around 26% of total global lithium demand. Originally used in computing and mobile communication devices, lithium ion batteries are experiencing increasing demand from fast-growing markets such as hybrid and electric vehicles. New emission targets, falling battery costs, improved driving range, an ever-expanding charging infrastructure, and the seemingly insatiable desire for an enhanced driving experience is expected to drive continued growth in this market. Growth in renewable energy and grid-storage systems is also is also expected to benefit the lithium market. Projected annual installations are expected to reach more than 15GW by 2025, from the current installed base of under 2GW.
Power on site at Mt Cattlin is supported by a wind and solar hybrid system and state-of-the-art solar tracking technology. Galaxy has 14 giant solar trackers and 2 wind turbines in operation at Mt Cattlin, which together generate 226 MWh per year of renewable energy. Mt Cattlin was the first mine site in Australia to have real-time solar tracking panels as part of its power generating requirements, which are able to follow the sun in all directions to provide 15% more power than a single axis system.
Mt Cattlin is one of three projects owned and operated by Galaxy, along with the James Bay lithium pegmatite project in Quebec, Canada, whose preliminary economic assessment indicated resources of 11.75 million tonnes grading at 1.30% Li2O, and the Sal de Vida (Salt of Life) deposit, one of the world’s largest and highest quality undeveloped lithium brine deposits. The company has completed the feasibility study for the Sal de Vida project, which is proven to have incredible expansion potential.
With one project now shipping, a watchful eye is owed to Galaxy in anticipation of the commencement of operations at their South-American site. Sal de Vida sits comfortably inside ‘The Lithium Triangle’ that is home to more than 60% of the world’s annual production of lithium and we believe that this asset provides optionality for any investor currently invested in Galaxy Resources.
Multiple fully-functioning resources is, in our opinion, a very close reality for Galaxy, and on the back of the steely grit they have demonstrated over the years, we are as eager as ever to see the Galaxy story unfold.
