Galaxy Resources Limited

Impacted by Lithium sector volatility:Down 6.6% on March 02, 2018, Galaxy Resources Limited (ASX: GXY) at Mt. Cattlin, produced 52,139 dry metric tonnes (dmt) of lithium concentrate during the December quarter, and this is an increase of 11% over Q3 2017. The company achieved this at an annualized rate of c.209,000 dmt tonnes per annum of lithium concentrate. GXY sold 58,094 dmt of lithium concentrate during the quarter, an increase of 39% over Q3 2017. The company has also signed offtake agreements with multiple customers for 5 years for 100% of total planned lithium concentrate production. Further, for Sal de Vida Project, the test work completed successfully producing battery grade lithium carbonate and lithium hydroxide. The planning had started for test evaporation pond and continuous pilot plant has been slated to be operational in 2018. In addition, there is significant mineral resource upgrade to 40.8 Mt @1.40% Li20 for James Bay Project. Additionally, in the December quarter, the company has repaid the BNP Debt Facility in full and now the company’s balance sheet is debt-free. The cash position at 31^st December 2017 was of the order of A$59.7 million. GXY had also acquired 12% strategic equity shareholding in Lepidico Ltd, through a private placement at 1 cent per share. Meanwhile, the global volatility in lithium sector with regards to prices to fall in the long term have led GXY stock fall 12.37% in three months as on March 01, 2018. We have a “Hold” recommendation on the stock at the current price of $3.11, given short-term scenario and group’s potential.
 

Orocobre Limited

Approximately 25% rise in prices of lithium carbonate slated for 2H FY18:Orocobre Limited (ASX: ORE) for 1H 2018 had posted profit of US$8.2 million, up from US$7.4 million on the prior comparative period (pcp) and the total production of 6,072 tonnes of lithium carbonate. Moreover, there has been a strong global market for lithium carbonate products and the prices continued to rise up-till recently. The company thus expected to see an increase of approximately 25% in 2H FY18 prices on those received in the 1H FY18. Additionally, for Olaroz Lithium Facility, approximately 14,000 tonnes of production of lithium carbonate is expected for FY18. For Borax Argentina, production forecast is of 35,000 - 40,000 tonnes for FY18. The corporate costs are expected to be of ~US$6 million for FY18. On the other hand, ORE stock has fallen 4.2% on March 02, 2018 like GXY and we give a “Hold” recommendation on the stock at the current price of $5.88
 

Saracen Mineral Holdings Limited

Strong 1H 2018 Performance: While the lithium sector stocks were rattled, Gold player, Saracen Mineral Holdings Limited (ASX: SAR) saw a surge of 2.4% on March 02, 2018. The group reported 209% growth in the Net profit after tax (NPAT) to A$46 million in 1H 2018. This is due to a 32% jump in sales revenue to A$245.6 million and increased gold sales of 154,119 ounces (Prior corresponding period: 119,550 ounces). Further, in 1H 2018, SAR has posted EBITDA growth of 123% to a A$103.4m and the Gold production rose 24% to record 157,795 ounces for the period. Cash and cash equivalents of A$82.9m at December 31, 2018, were up from A$45.2m at June 30, after the company spent A$37.6m on growth project development and exploration. Moreover, in early February, SAR has added 30,000 ounces of hedging at A$1,751/oz for the period from September 2018 to December 2019. In February 2018, the hedge book comprised of 265,343 ounces at an average delivery price of A$1,654/oz. As a result, SAR stock has risen 11.78% in three months as on March 01, 2018. We give a “Hold” recommendation on the stock at the current price of $1.70

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