GALAXY RESOURCES LIMITED (ASX: GXY)

Regaining momentum: With the spotlight back on development in the electric cars’ segment, lithium sector seems to be again on the upsurge. With this, Galaxy Resources Limited zoomed up by 5.2% on April 06, 2018 post a fall of 31% in last three months. Lately, the group highlighted that its presentation (reporting) currency will change from Australian dollars to US dollars, commencing with the 2018 financial year. Accordingly, the quarterly report for the quarter ending 31 March 2018 and the half-year financial report for the six months ending 30 June 2018 will be presented in US dollars. Meanwhile, the group has significantly improved its geological interpretation of the Mt Cattlin resource; and as at 31 December 2017, Mt Cattlin was estimated to contain 11.6 million tonnes at 1.2% Li₂O or 140 thousand tonnes of contained Li₂O metal. This was reported post a full year of mining and processing operations at Mt Cattlin, along with a comprehensive RC and grade control drilling campaign (>10,000m). Further, the fundamentals are strong given the FY17 revenue growth of A$125.6M and EBITDA rise of A$60.3M while cash balance has been A$59.7M, up from 2016 figure of A$9.3M. We have a “Hold” on the stock at the current price of $3.040.
 

Cash Position (Source: Company Reports)
 

OROCOBRE LIMITED (ASX: ORE)

Disappointing lithium Production at Olaroz due to Adverse Weather Condition:Orocobre Limited’s (ASX: ORE) stock tumbled by about 9.542% on April 05, 2018 after the release of its lithium production update at Olaroz facility. However, with a resurrection in lithium stocks, ORE recovered by about 5.7% on April 06, 2018. ORE’s Production for the March quarter was 2,802 tonnes, down by 29% from 3,937 tonnes in the December quarter. The lower production rate in the March quarter was due to evaporation rates that were 24% below as compared to 2017 with reduced solar radiation from cloudy conditions and above normal rainfall. However, sales recorded 3,052 tonnes due to an increase in the realised average price by 17% on the December quarter and amounted to US$13,533 per tonne on FOB basis and the group registered total sales revenue of US$41.3 Mn. Despite the increased unit costs, gross cash margin is expected to be higher than the December quarter. The management expects that production in the June quarter is expected to be significantly higher than the previous quarter. But despite this, the company now expects full year production to be less than the previous guidance of approximately 14,000 tonnes that is approximately 10% lower than expected. Recently, Orocobre disclosed to the market that one of its director Leanne Heywood who has a direct interest in the Company, initially was holding 10,800 shares and now acquired 1000 more shares. Now total shares acquired by were about 11,800 for a consideration of $5,200. Looking at the dynamics, we maintain a “Hold” at the current price of $5.010.


Olaroz Lithium Facility (Source: Company Reports)   

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