Galaxy Resources Price Target Raised 8.3% to A$0.65/Share by Canaccord Genuity, page-23

22 July 2016 -
SECOND SUPPLEMENTARY BIDDER’S STATEMENT (GMM)

1. MT CATTLIN PROJECT PRODUCTION UPDATE
   Driven by the substantial efficiency gains on offer and following maiden commissioning of the fines circuit at Mt Cattlin, construction has continued to install a larger circuit which will result in a significantly expanded processing facility.
   As detailed in General Mining’s ASX Announcement dated 19 July 2016 (which is attached at Annexure 1), the new circuit is intended to:
   1. (a) reduce mica content below 5% of the total mass in the finished concentrate (previously 20%);
   2. (b) increase throughput design to an annualised run rate of 1.6 Mtpa (previously assumed by GMM to be 800,000tpa);

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(c) increase yield from a historic 50% to approximately 75% by recovering both fine spodumene and coarse tantalum, as well as significantly reducing mica content; and
(d) reduce operational costs per tonne through a number of efficiency gains.
No delays to deliveries have been incurred due to the upgrading of capacity at Mt Cattlin and the first shipment from the enlarged circuit remains scheduled for September 2016.
Galaxy and General Mining will now have a substantially increased volume of both spodumene and tantalum concentrates to sell with the opportunity to meet market demand for spodumene concentrate at a time of constrained supply into the China based lithium refining markets.
Surplus 2016 production (above the committed 45,000t) is likely to be sold into the spot market and discussions with both existing and new customers to date indicate very strong demand for both products for all of the forecast production for 2017.

Canaccord 14 Aug 2016
Mt Cattlin - expanded capacity earlier than prior expectations: We recently visited Mt Cattlin, noting that due to changes to flow sheet design and the impact of wet weather, initial concentrate production is running behind previous expectations. We have revised our modelled production ramp up, with initial concentrate sales now modelled for the DecQ'16 (vs prior guidance of SeQ'16) and targeted production rates by mid'17. We highlight that the proposed increase in production is now likely to be achieved earlier than prior assumptions, resulting in concentrate production of 230ktpa (~30ktpa LCE) by 2H'17 versus prior CGe of 206ktpa (28ktpa LCE) by 1H'18.