Upcoming Updates on Sal de Vida and James Bay Projects Will Provide Information on Advancing Long-Term Growth

Key Points

  • Galaxy Resources (GALXF) is a pure-play lithium producer.  Galaxy produces lithium at its Mt Cattlin spodumene mine in Western Australia and is advancing new projects toward first production at Sal de Vida in Argentina and James Bay in Canada.
  • A record 75,336 dry metric tons (dmt) shipped from Mt Cattlin in 4Q20.  Operations are expected to reach up to full rate in 2Q21 to take advantage of improving prices, low inventory, and strong demand from Galaxy’s customers. 
  • Galaxy’s 2021 forecast estimates significant increases in the amount of material mined, ore processed, and concentrate produced along with decreased cash costs per ton produced.  Management expects sales will be based on spot market prices.
  • Front-end engineering design (FEED) is nearing completion at Sal de Vida.  Updated project financial estimates are expected to be released early in 2Q21.  A recent pilot run produced lithium carbonate at a 99.85% purity.  Piloting will continue in 2021 with first production expected late 2022.
  • A preliminary economic assessment (PEA) is anticipated in 1Q21 for the James Bay project.  Galaxy is accelerating the production to construction-ready status by late 2021.
  • As of December 31, 2020, Galaxy had US$215.1 million of cash and financial assets and zero debt on its balance sheet.  The strong financial position underpins the company’s ability to advance its Sal de Vida and James Bay projects.
  • Galaxy is scheduled to report full year 2020 financial results on February 25, 2021.

Our Insights

Galaxy exited 2020 with a strong financial position to continue advancing the Sal de Vida and James Bay projects toward production.  The company’s Mt Cattlin mine turned in a strong 4Q20, with sales up 349% from the prior quarter and achieved full-year guidance.  Mt Cattlin production was expected to reach full rate in 2Q21in response to strong lithium market fundaments.  Completion of FEED work at Sal de Vida and a PEA at James Bay, both of which are expected late 1Q21 could provide investors with greater confidence of Galaxy’s growth potential over the next several years.  First production at Sal de Vida is expected in late 2022.  Financial results for the full year 2020 are scheduled to be released on February 25, 2021.

Jeff Robertson is assuming coverage of Galaxy Resources with this report.