Ramping Lithium Production to Meet Expected Market Demand

Key Points

  • Galaxy Resources Limited (OTCMKTS: GALXF) is a small-cap growth company and lithium pure-play producer. GALXF currently produces lithium through its spodumene mine (Mt. Cattlin) in Western Australia and is developing a high-quality brine resource at its Sal de Vida project in Argentina.
  • Sal de Vida’s initial production of lithium carbonate is expected in Q4:2022 and could be an inflection point for the company. Increased lithium production may coincide with a significant increase in lithium demand driven by strong growth in the electric vehicle market. Benchmark Mineral Intelligence (BMI) recently forecast total lithium demand will exceed operational supply beginning in 2022, reportedly causing a lithium supply shortage that is expected to accelerate through 2040.
  • GALXF is well capitalized with ~$108.6M in cash and liquid assets and no debt, and is in a strong position to handle the near-term oversupply environment. Management believes they are well positioned to be able to execute on the initial stages of the Sal de Vida project while continuing to fund operations at Mt. Cattlin, given the company’s current balance sheet position.
  • Over the longer term (>3 years), GALXF may expand its operations to James Bay, which is a high concentration spodumene deposit near Quebec, Canada. James Bay might provide a valuable option for GALXF should market demand increase as anticipated.