Galaxy Resources Limited

GXY Details

Agreed to sell SDV northern tenements to POSCO for US$280 Mn: Galaxy Resources Limited (ASX: GXY) has entered into a non-binding agreement with POSCO to sell a package of tenements located on the northern area of the Salar del Hombre Muerto in Argentina, for cash consideration of US$280 million. This non-binding agreement is conditional on completion and execution of definitive documentation and receipt of POSCO Board approval which is expected to be satisfied during the third quarter of 2018. Management stated that proceeds from the transaction with POSCO will be used to progress the development of Sal de Vida in the Catamarca Province and places GXY in a strong financial position to continue the planned development of the project. Additionally, the GXY and POSCO will also enter into a cooperation agreement which is intended to maximize potential development, operational, infrastructure and logistical synergies for their respective projects. The transaction will allow Galaxy for maximum flexibility with the parallel formal process being conducted with JP Morgan.


Sal de Vida Project (Source: Company Reports)

With this attractive deal, the stock price climbed up 14.381 per cent on May 29, 2018. In the past one year, the stock price has risen 24.58 per cent and currently, it is trading above mid of 52-week range post the downfall witnessed due to weakness in lithium sector. Based on aforesaid development in view of the recent lithium price volatility, we recommend a “Hold” position on the stock at the current market price of $ 3.420.
 

GXY Daily Chart (Source: Thomson Reuters)
 

Pilbara Minerals Limited

PLS Details

36% Rise in Mineral Resources at Pilgangoora Project: Pilbara Minerals Limited’s (ASX: PLS) stock edged up 1.69 per cent on May 29, 2018 following the announcement on the further rise in the Mineral Resource at its flagship 100%-owned Pilgangoora Lithium Tantalum Project in WA’s Pilbara region to 213 million tonnes. According to the release, the updated Mineral resources disclosed 36% rise in total resource tonnage which now comprises a total of 213 Mn tonnes grading 1.32% Li₂O (spodumene) and 116 ppm Ta₂O₅ (tantalum), containing 2.82 Mn tonnes of lithium oxide and 54.6 Mn pounds of Ta₂O₅. The upgraded Mineral Resource includes the results of all exploration drilling campaigns from January 2017 through to April 2018. Besides this, the new resource estimate will provide further support to a compelling business case for the construction and development activity of Stage 2, 5Mtpa expansion. The expansion is targeted to commence shortly after the beginning of first concentrate and the initial ramp-up of spodumene concentrate production from the Stage 1, 2Mtpa operation. Apart from this, the project which is now just weeks away from the beginning of Stage 1 production, the group could not be better placed to take full advantage of high demand for lithium raw materials, which is rising continuously. That’s why, the group has now focused on the upcoming commissioning and ramp-up activities, which will ensure that the company will make the all-important transition from developer to a globally significant new strategic metals supplier over the coming months.


Pilgangoora – A globally significant hard rock resource (Source: Company Reports)

Recently, the South Korean POSCO has signed a partnership deal to buy lithium from Australia based Pilbara Mineral Limited and set up a downstream processing joint venture (DSJV) in South Korea. According to the deal, POSCO will buy an initial 80,000 tonne per annum of chemical grade spodumene concentrate from Pilbara’s Pilgangoora Stage 2 Project. This DSJV expands Pilbara’s access to the battery industry and will help Pilbara to expand its knowledge of the lithium supply chain and core competencies. Meanwhile, the share price soared up 113.25 per cent in the past one year as at May 28, 2018 but declined by 2.21 per cent in past one week. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $ 0.900, considering the resource upgrade which will strengthen a new ore reserve and deliver better results.
 

PLS Daily Chart (Source: Thomson Reuters)
 

Kidman Resources Limited

KDR Details

Long term Growth Story Intact: In March 2018, the group updated its Mineral Resource Estimate (MRE) for the Earl Grey Lithium Deposit of 189 million tonnes at 1.50% Li₂O, containing 7.03Mt of Lithium Carbonate Equivalent (LCE). The Earl Grey Resource will set a strong foundation for operations at Mt Holland, with the team on further discoveries and product-supply extension within the Mt Holland district of which Kidman Resources and its JV partner hold the most prospective ground. Following the aforesaid activity, the group has estimated an Exploration Target for Earl Grey of an additional 20-40 million tonnes at 1.3-1.5% Li₂O. We expect that the group will achieve this objective by delivering Mt Holland Lithium Project safely, on time and within the budget, by seeking offtake agreements with selected blue-chip counterparties.


Earl Grey Lithium Deposit (Source: Company Reports)

Recently, Charles McGill has resigned as Chief Financial Officer (CFO), effective immediately while the current General Manager Finance and Commercial, Jason Eveleigh will take on the role of acting CFO. Meanwhile, the stock has risen 344.44% in past one year (as at May 28, 2018) but declined by 7.56% in past five days. The group has also signed an offtake agreement with Tesla. We maintain our “Buy” recommendation on the stock at the current price of $ 2.270 (up over 3% on May 29, 2018), considering significant growth potential which is yet to be fully-explored based on high-grade drill results from its Resource boundary and stock’s resilience at times when peers were impacted by lithium oversupply issues.
 

KDR Daily Chart (Source: Thomson Reuters)
 

Altura Mining Limited

AJM Details

Commissioning Update: Altura Mining Limited’s (ASX: AJM) stock tumbled 1.333 per cent on May 29, 2018 while the group announced that its 100%-owned flagship Altura Lithium Project has confirmed the completion of a revised Ore Reserve and Mineral Resource estimate. Because of this, the increased estimate has added a minimum two years life to the project and will be incorporated into the Stage 2 expansion that was the subject of a recent robust Definitive Feasibility Study (DFS).


Altura Pilgangoora Mineral Resource Estimate – May 2018 (Source: Company Reports)

Additionally, the revised estimate, which followed the completion of a drill program in the Southern Ridge Deposit area, has also increased overall confidence in the project inventory by classification. This Mineral Resource Estimate (MRE) is a result of a recent (2018) infill drilling campaign by Altura which consisted of infill drill holes on a 40m by 40m grid in the Southern Ridge Area which was completed between February and March 2018. Moreover, the exploration and development team delivered outstanding results that will not only add confidence to the existing operation but strengthen the planned Stage 2 expansion to 440,000 tonnes per annum production. Consequently, the management stated that Altura’s strategy is on track for first lithium concentrate production in Q2 FY18 and the first customer shipments in July 2018. Theproject looks to be at an advanced stage in terms of producing lithium to fill the gap with the help offtake partners. This will provide a substantial growth opportunity to maximize shareholder returns. Based on the foregoing, we maintain our “Hold” recommendation on the stock at the current market price of $ 0.370.
 

AJM Daily Chart (Source: Thomson Reuters)

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