Galaxy Resource Ltd (ASX: GXY)

Record production and sales: With demand for lithium-ion batteries on an uptrend, supply from the Australian lithium miners is paving path for higher commodity prices expected to be seen in 2018. Amidst this scenario, Galaxy Resources has released its result for the quarter ended 31 December 2017. For Mt Cattlin, the group reported record production entailing 11% rise to 52,139 dry metric tonnes (dmt) of lithium concentrate, over Q3 2017 and record sales of 58,094 dmt of lithium concentrate, reflecting an increase of 39% over Q3 2017. While average production cash costs (excluding royalties and marketing fees) of US$325 (A$423) per dmt produced was mentioned, there was 3% rise in average realized selling price before royalties and marketing fees of US$868 (A$1,125) per dmt sold. The group also highlighted an EBITDA of A$34.2 million for Mt Cattlin while offtake agreements have been signed with multiple customers for 5 years for 100% of total planned lithium concentrate production. GXY has already discussed pricing for FY18 with the headline pricing achieved higher than FY 2017 pricing. Further, the plant improvement projects have been planned to be completed during early Q3 2018 and are expected to target improved recoveries of 70% to 75% from the current 58% (which has been above the target level of 50-55%).
 

Mt Cattlin Update (Source: Company Reports)
 
For Sal de Vida Project, continuous pilot plant has been earmarked to be operational in 2018. James Bay Project revealed mineral resource upgrade to 40.8 Mt @1.40% Li₂0 while feasibility study is tracking well. GXY also has significant cash on hand of A$59.7 million (excluding the receivable of A$14.9 million for the shipment made in December 2017 but received in January 2018).

The group sees to keep on benefitting from the healthy outlook for growth in the Electric Vehicle sector throughout 2018.

We have a “Hold” on GXY stock at the current price of $4.26

Another lithium stock that released its quarterly updates has been Orocobre Ltd (ASX: ORE) that revealed 84% rise in December quarter production over September quarter with 23% rise in gross cash margins on a quarter on quarter basis owing to higher sales prices and lower costs at its Olaroz facility. The full year production guidance of 14,000t of lithium carbonate has been maintained. ORE has also signalled a strategic funding initiative of A$361m to accelerate an increased Phase 2 expansion at the Olaroz lithium facility in Argentina.

All-in-all, the key lithium groups seem to be continuing with their streak of upwards performance with a boost coming-in from macro landscape.

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