Galaxy Resources Limited 

GXY releasedits September quarterly update on 18^th October mentioning about data on production which indicates that there was around 35% reduction in production as compared to previous quarter and the fall in production was on account of lower feed grade and delays in completion of yield optimization project which led to reduced recoveries.

Production impacted the stock movement:Mining volumes posted an 8% fall compared with the previous quarter resulting from a delay in receiving permits to allow planned mining access to the east of floater road. As on September 30, 2018, GXY has US$54.7 million cash and liquid securities with zero debt recorded on the balance sheet. Company received shipment payment of US$13.3 million in early October. Technically, the scrip is in bearish trend from the month of June with slight pull back in the month of July. The overall trend remained bearish. In the month of October, scrip made lower lows on the charts with trading at the lower end of the Bollinger bands. The market cap of GXY  was recorded at $868.03m, with price to earnings ratio (P/E) of 34.75 x as on October 30. At current juncture, scrip is trading at the price levels of $2.24, and production data and project delays exhibit a “Hold” scenario at the current price levels of $2.24 while improvement in lithium prices and demand can boost the stock. GXY was up 5% on October 30, 2018.

Orocobre Limited 

Recent introduction of an export tariff by the Argentine government and concern over lithium prices continued to weigh on ORE. Lower seasonal evaporation and a scheduled two week maintenance outage reported 36% drop in production for the September quarter from 3596 tonnes  in the June quarter. Gross cash margins of 68% were reported during the quarter.

Projects in pipeline:Company has several projects in pipeline. The terms of the EPC contract are expected to be agreed during this quarter which will provide for further developments to both the projects.

Technically, the scrip is trading at lower low and at the lower end of the Bollinger band. Relative Strength Indicator now represents that the bearish trend is expected to reverse in near term. The market cap of ORE was recorded at $894.02m, with price to earnings ratio (P/E) of 305.36x as on October 30. At current juncture, scrip is trading at the price levels of $3.35, which is closer to the 52 week low level. We have a “Buy” recommendation on the scrip as fundamentally the company focusses on the exploration and development of Lithium, and with Lithium battery market size projected to be significant by 2022, we expect growth for the company in near term.          
 

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