Galaxy Resources Limited

 

GXY Details
 
Repayment of Senior Secured Loan Worth US$32.5Mn:Galaxy Resources Limited (ASX: GXY) is involved in lithium production, minerals exploration and brine assets in Canada, Australia, and Argentina. On 2^nd December 2019, the company repaid its outstanding senior secured loan facility from Alita Resources Limited, which it purchased in August 2019. The total amount received under the facility was US$32.5 million, which will be utilized to pay off its corporate debt facility.Galaxy Resources Limitedis presently in a strong financial position to support the Sal de Vida Project development phase.
 
Shareholder Update:On 9^th December 2019, the company issued an announcement stating that Credit Suisse Holdings (Australia) Limited will be a substantial holder of the company, holding 20,942,985 ordinary shares with a voting power of 5.11%.
 
Key Highlights for Third Quarter Ended 30 September 2019: Production volume of lithium concentrate at Mt Cattlin came in at 50,014 dry metric tonnes, grading 6.0% Li2O. This figure was within the production guidance range of 45,000 – 55,000 dmt. Production unit cash cost stood at US$387 / dmt free-on-board at Mt Cattlin. The total shipment volume of lithium concentrate came in at 58,278 dmt. The figure was marginally below the guided range of 60,000 – 70,000 dmt. The company exited the quarter with a cash and debt balance of US$169 million and US$32 million, respectively.
 

Production and Operations Highlights (Source: Company Reports)
 
Outlook: In the coming quarter, the company expects lithium concentrate production volume to be in the range of 35,000 – 45,000 dmt.  FY19 production is expected to be in the range of 183,000 – 193,000 dmt. Shipment volumes for the coming quarter are expected to be between 30,000 – 40,000 dmt. 
 
Stock Recommendation: As per ASX, the company’s stock is trading below the average of its 52-week trading range of $0.815 - $2.590. As on 17 December 2019, the company’s market capitalisation stands at ~$382.86 million, with 409.48 million outstanding shares.  The company has recently repaid its outstanding Alita senior secured loan facility. The transaction is likely to help the company to establish a strong capital structure and credit profile to support growth prospects.Hence in view of aforesaid facts and current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.890, down 4.813% on 17 December 2019.

 
GXY Daily Technical Chart (Source: Thomson Reuters)
 

Lepidico Limited

 

LPD Details
 
Robust Results from the Karibib Lithium Project: Lepidico Limited (ASX: LPD) is involved in the exploration, development and production of lithium chemicals. On 17 December 2019, Lepidico Limited stated outstanding infill drilling results, wherein Helikon 1 outcome came in at 23.52 m at grading 1.25% Li2O, 15.67 m at grading 1.54% Li2O and 20.51 m at grading 0.96% Li2O.The company also stated that its recent tenement renewal applications were approved.
 
Other Recent Updates: On 16 December 2019, the Company stated that 7,706,421 unexercised warrants at an exercise price of $0.44 per warrant and 1,659,388 unexercised warrants at an exercise price of $0.44 per warrant have expired on 13 December 2019.
 

Unlisted Warrants (Source: Company Reports)
 
Quarterly Highlights for the Period Ended 30 September 2019: During the quarter, Karibib Lithium Project in Namibia was fully integrated with Lepidico systems. The company also notified the completion of L-Max® Pilot Plant trial, which lasted for ten days. The trial resulted in an average lithium carbonate extraction of 99.95%. Cash and cash equivalents at the end of the quarter stood at $6.5 million.
 

Lithium Carbonate Assay Results (Source: Company Reports)
 
Stock Recommendation: As per ASX, the company’s stock is trading below the average of its 52-week trading range of $0.015 - $0.043. As on 17 December 2019, the company’s market capitalisation stands at ~$70.46 million, with 4.4 billion outstanding shares.  The stock went up by approximately 8% on a year-to-date basis. The company expects lithium to be a key element used in both electric vehicles and energy storage systems. The company also expects lithium demand to increase annually to approximately one million tonnes by 2025-26.Considering the above industry scenario, financial and operational performance in the September quarter, recent developments with respect to the Karibib Lithium Projectand current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.016 as on 17 December 2019.
 
 
LPD Daily Technical Chart (Source: Thomson Reuters) 

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