Shares lithium producer Galaxy Resources surged and sagged yesterday in the wake of the release what was on the whole an encouraging production report for the three months to September.
The shares surged more than 3% to an eight year high (intraday) of $3.72 before they slid in afternoon trading to end down 1.4% $3.49, confirming again that it is one of the more volatile emerging miners.
With the company reporting an earnings before interest, tax and depreciation and amortisation figure for the September quarter, Galaxy could be in danger of losing its speculative appeal and becoming humdrum normal.
Galaxy Resources said production of lithium concentrate from its Mt Cattlin operations n WA for the three months to 30 September jumped 43% quarter on quarter to 47,075 dry metric tonnes. Sales of lithium concentrate grew 39% compared to the previous quarter.
Demand for lithium, the raw material used to make batteries, has risen on higher demand from electric vehicles, particularly from China.
Chinese automaker Great Wall Motor last month took said it will take a 3.5% stake in Australia’s Pilbara Minerals to secure a supply of the key material.
Galaxy Resources said in its production report yesterday (http://www.asx.com.au/asxpdf/20171016/pdf/43n8mftndtzbsg.pdf) average production cash costs (excluding royalties and marketing fees) of $US320 ($A405) per dry metric tone (dmt), a reduction of 18% from the June quarter of 2017 . the average realised selling price before royalties and marketing fees was $US843 (A$1,062) per dmt sold, an increase of 17% over the June quarter. That generated earnings before interest, tax, depreciation and amortisation of $21.6 million for the quarter.
“Demand trends in lithium ion battery applications continued their positive trajectories throughout 3Q CY2017, and further act to support an extremely robust outlook for demand within the sector. Galaxy said yesterday.
“Structural changes in the electrification of transport and the transition to a greater penetration of renewable energy generation in both developed and developing economies continues to propagate as evolving government policy and regulation support the acceleration of these technologies."
Cash on hand at 30 September 2017 was $A57.4 million and the net cash position was $A48.9 million after deducting the BNP debt of $A8.5 million.
