Galaxy Resources Limited

GXY Details

 Constant optimization works at Mt Cattlin: Mt Cattlin Operations continues to improve since the restart in the last quarter of 2016, across several different operating parameters including concentrate grade and production throughput. Importantly, from 20 to 23 May, it witnessed record production days averaging 570 wmt (wet metric tons) produced per 24-hour period, which exceeds design nameplate. With continued processing plant and mining optimization work ongoing at Mt Cattlin, in conjunction with capital enhancement projects that are being considered, it is expected the plant will now maintain at least design production levels. Further, Galaxy has booked its first vessel shipment for the first week of June at 2017 contract pricing terms. This shipment will be the first of US$830 for 5.5% lithium oxide concentrate and customers will pay an additional US$15/t for every 0.1% improvement in grade of Li2O delivered, resulting in an agreed price of up to US$905/t for 6% lithium concentrate. Total tonnage contracted at these pricing levels for delivery in 2017 is estimated at 120,000 dmt (dry metric tons). In concert with its customers, the plan is to target at least one shipment per calendar month to be delivered for the balance of 2017.

The Mt Cattlin operation has completed its first tantalum sale, for 1,927lbs Ta2O5 and production for the remainder of 2017 is budgeted to exceed 24000lb. Further, its offtake partners in China have successfully commenced production and sale of lithium hydroxide converted from Mt Cattlin supplied lithium concentrate. GXY stock declined 19.6% in the last six months (as of June 03, 2017) and is still trading at moderate levels. We give a “Buy” recommendation at the current price of $ 1.92

Independence Group NL

IGO Details

Q3FY17 impacted by lower zinc shipments: During Q3FY17, Independence Group NL (ASX: IGO) reported revenue decline of 35% qoq at $83.9 million, impacted by lower less zinc concentrate shipments and no copper concentrate shipment from Jaguar. However, Tropicana gold sales were in line with expectations and Long continued to deliver by maintaining strong sales volume. NPAT increased to $12.3 million, led by $4.4 million before tax mark-to-market investment revaluation gains, and the non-recurrence of a A$3.9 million acquisition stamp duty tax expense in the December 2016 quarter. Further, cash flows from operating activities increased by $6.0 million to A$23.4 million, primarily due to the non-recurrence of the prior quarter’s stamp duty taxes paid; $52.5 million assessment for the Sirius Resources NL’s Nova acquisition, and a A$5.7 million payment in relation to the completed duties assessment for the 2011 acquisition of Jabiru Metals Limited’s Jaguar Operation. IGO continued to fund the Nova Project build and ramp up from existing cash reserves and cash flow from operations, with $35.6 million spent during the Quarter. As a result, there were no further debt draw-downs during the Quarter and drawn term debt remains at $200 million. Over the past one month, the stock has moved up by 11.8% (as on June 13, 2017) and still seems to be on the strong drive. We give a “Buy” recommendation on the stock at the current price of $ 3.29

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