The Galaxy Resources Limited (ASX: GXY) share price is rising after making an announcement to the market.
Galaxy is a lithium business that has hard rock mines and brine assets in Australia, Canada and Argentina. It also owns lithium production facilities. It wholly owns the Mt Cattlin mine in Ravensthorpe, Western Australia. One of Galaxy’s key assets is the Sal de Vida lithium project which the company says has the potential to be an excellent low-cost brine-based lithium carbonate production facility.
What Galaxy Resources Announced
Galaxy Resources said that it achieved record monthly production volume of 21,901 dry metric tonnes (dmt) of lithium concentrate in April 2019. This means if that were achieved every month for a year it has an annualised run rate of over 260,000 dmt.
The miner said that it achieved an average final product grade of 5.92% Li2O compared to 5.75% Li2O in the first quarter of 2019. The overall plant recovery was 61% compared to the 51% average in the March 2019 quarter.
Galaxy Resources said that its cash cost per tonne of lithium concentrate produced recorded at US$329 per dmt compared to US$453 per dmt reported in the first 2019 quarter.
The production guidance for the second quarter has been reaffirmed at 45,000dmt to 50,000 dmt of lithium concentrate. The company also guided that the shipment volume and sales guidance is 45,000dmt to 50,000dmt of lithium concentrate in the second quarter.
Galaxy Managing Director Anthony Tse said: “Our customer base in China is linked to some of the top-tier lithium supply chain end users, demonstrating the broad acceptance and recognition of consistency of the Mt Cattlin product.
Aside from quality, the continued reduction in unit production costs ensures Galaxy has a competitive advantage, allowing the Company to continue delivering a healthy operational cash margin, notwithstanding the recent softening of lithium feedstock and chemical pricing.”
Time To Buy Galaxy?
I would say this is one of the most promising updates from Galaxy over the past few years, the Galaxy share price is up 2%. Achieving higher production, a lower cost of production and higher quality is a great combination for a miner.
If I were looking to buy Galaxy then I’d be closer today. But, I’m generally not a fan of owning commodity businesses like Galaxy. In my portfolio I like businesses that don’t really rely on resource prices being favourable such as the reliable ASX shares in the FREE REPORT
below.
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