Galaxy Resources Limited (ASX: GXY)

Update on Feasibility Study: Galaxy has witnessed a stock price fall of 3.7% on May 15, 2018 with the release of an update from the definitive feasibility study (DFS) for the Sal de Vida Project. GXY advised that it has completed an update of the Definitive Feasibility Study (“DFS”) for the Sal de Vida lithium project (“Sal de Vida”) located on the Salar del Hombre Muerto in northwest Argentina. The updated DFS economics reaffirm the potential for a long-life, low cost and highly profitable operation. The revised post-tax net present value (“NPV”) of Sal de Vida is estimated to be US$1.48 billion at an 8% discount rate. For this feasibility update, Galaxy commissioned Techint to review the capital cost estimates under 2018 pricing parameters. The revised capital cost estimate for the Project is now US$474 million (US$443 million excluding the optional potash circuit). The average operating costs look slightly high and the internal rate of return seems to have been reduced from about 35% to about 26.9%. The revised feasibility incorporates new tax assumptions resulting from recent tax reforms implemented by the Argentinian federal government. The key tax reform measure impacting the economics of Sal de Vida is the reduction of the corporate income tax rate and an increase in the export incentive allowed to lithium mining companies operating within the Puna Region. Galaxy is advancing plans to develop the Sal de Vida lithium and potash brine project in Argentina situated in the lithium triangle (where Chile, Argentina and Bolivia meet), which is currently the source of 60% of global lithium production. Sal de Vida has good potential as a low-cost brine-based lithium carbonate production facility. The stock was down by 20.15 per cent in the past six months and rose up by 11.07 per cent in the past one month. While investors were expecting more from the Sal de Vida Project, GXY has other strong assets that have been performing well. We thus, give a “Hold” recommendation at the current market price of $3.09.


Operating Cost Breakdown, Lithium Carbonate Operations (Source: Company Reports)
 

Pilbara Minerals Limited (ASX: PLS)

Commencement of commissioning at first crusher at Pilgangoora Lithium Tantalum Project: Australian lithium developer, Pilbara Minerals Limited announced that ore load commissioning has begun through the crushing facilities at its 100%-owned Pilgangoora Lithium Tantalum Project in WA. In parallel with the commencement of load commissioning of the crusher, construction of the overall processing plant for Pilgangoora is progressing towards completion with subsets of the plant’s circuits being completed, in preparation for the commencement of commissioning of the main Pilgangoora concentrator in the coming weeks. The Company remains on track to deliver the first concentrate from the processing plant by the end of June 2018. Consistent with Pilbara’s plans for delivery of Direct Shipping Ore (DSO), the Pilgangoora Monster pit and associated infrastructure are now fully established at site and mine gate ore deliveries commenced to Atlas during late April. Under the agreement with Atlas, Pilbara will deliver a minimum of 1.0 million tonnes of unprocessed run-of-mine lithium-tantalum material from the Pilgangoora mine to Atlas on a mine gate sale basis, based on a delivery schedule which is designed to allow Atlas to ship 100,000 tonnes of DSO per month to off-take customers. The stock was down by 9.4 per cent in the last six months, followed by a rise of 12.3 per cent in the last one month. After the update of commissioning on Pilgangoora Lithium Tantalum Project, the stock was up by 2.2 per cent on 15 May 2018. We give a “Hold” recommendation at the current market price of $0.93.


Pilgangoora Lithium Project (Source: Company Reports)

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