Galaxy Resources has made a strategic equity investment of $22.5m in Alliance Mineral ((A40)). This takes its holding to 12%. Alliance Mineral is currently ramping up the Bald Hill lithium project in Western Australia and has guided to production of 240,000t of spodumene concentrate in FY20.
Citi believes Galaxy Resources is looking at options to maintain and grow its exposure, as Sal de Vida and James Bay are still a few years away from meaningful production. Buy rating and $2.70 target maintained.
Sector: Materials.
Target price is $2.70.Current Price is $1.64. Difference: $1.06 – (brackets indicate current price is over target). If GXY meets the Citi target it will return approximately 39% (excluding dividends, fees and charges – negative figures indicate an expected loss).
