Banter and General Comments, page-284

Reading Anthony Tse in his last earnings call I think lithium chemicals production is coming @ProCapitalism.

Maybe the recent investment progressing might be subject to the POSCO transaction completing and is earmarked for a few days time.

Moving on to Sal de Vida. As you all know, we signed a binding agreement with POSCO to sell the tenement package for the northern area from USD 280 million. In early October, POSCO transferred $257 million of the $280 million into an escrow account at HSBC. These funds will be released to Galaxy once the tenement transfer deeds are received by the Salta and Catamarca mining courts, which is expected to be completed by the end of October. - Alan Rule

Nick Herbert

Okay. And just a comment that we had and I think Rahul was mentioning as well maybe in a different context that 3,000 tonne pilot shipment to POSCO. What is that exactly? Is that the shipment that you're sort of -- you're signing up to try to get them as a new customer? Or is that sort of in reference to a potential downstream processing cooperation?

Anthony Tse

Well, is say's pilot, Nick. So there are obviously -- they're working to kind of take out material for the purpose of the pilot facility that they have there. I think it's reasonably common knowledge that they do have an intent to build a downstream conversion facility. Obviously, we've just -- and probably literally the last couple of steps in the final stray in terms of completing a strategic transaction with POSCO on Sal de Vida. So obviously, we have a good -- a very good rapport with them in terms of our relationship and how that transaction went. And yes, we've talked about potential other synergies, whether it's outside of Vida or any other aspects. I mean, POSCO obviously has fairly substantial ambitions, not necessarily so much for the lithium space, the lithium chemical space specifically, but more importantly for the cathode space. So, as you know, they've got a joint venture in Chile. They recently, earlier this year, went into a joint venture with Huayou Cobalt in China on the cathode space as well. In Chile, that joint venture is with Samsung SDI. And in Korea, they obviously have their own plans to kind of build additional cathode capacity. As a result, security of supply in terms of the resource is important for them. And I think there's also a little bit of recognition from POSCO that historically, Galaxy has also built and operated a converter facility in China, which was, at the time, the largest most technologically advanced and highest producing quality. And so I think there's avenues with POSCO subsequent to the completion of the existing transaction that we have in hand to evaluate other potential areas with a further strategic cooperation.

Peter Arden

Just wondering you haven't really talked much about the company's plans or strategy to get into or explore tolling arrangements, whether your tie up potentially with POSCO is a way of doing that or are you still exploring it on a wider front?

Anthony Tse

I think a very good question, Peter. I think what we're -- how that thinking has actually evolved is obviously, in our minds and from my perspective, high quality and consistent in producing kind of supply of spodumene in the market is there's still kind of a limited kind of number of players that downstreams can actually go to from. But how our thinking has actually evolved probably since the last time I saw you, Peter, is that I think we are now probably a little bit more even more proactive to think beyond just tolling. And so from that perspective, as Alan kind of mentioned before, we're probably in the strongest financial position that the company has ever been before. For those shareholders who have been very supportive for us over a number of years, you may recall, up until not too long ago, the company actually had probably $250 million of net debt. And today, on a pro forma basis by the end of this month, we're hopeful that, that can be probably a net cash position of $450 million with zero debt. We're bringing online a very kind of competitive asset over the next few years by way of Sal de Vida, which it's important to note that Argentine brines today, in our view, is actually the lowest production cost quartile globally if you actually fully account for the royalties and at a country level.

So if you actually look at Chile today, once you have the Corfo royalties at the fractured system for some of the other players in that particular country, the cost of production in Chile is actually less competitive than in Argentina. So we think we've got a very good asset there. And one of the things that we have been very proactive thinking about as we kind of think about the next steps of our business development strategy is essentially us to obviously kind of keeping busy and closing out the strategic partnerships that we have on Sal de Vida is actually thinking a lot more long term in terms of how we get more participation in the downstream. And so Peter, on that front, I would say that our thinking has actually evolved beyond just tolling and looking at specific kind of downstream conversion opportunities where we think we can play an important role and basically become an integrated producer of chemicals. I mean, ultimately, our business plan is not just fixated on producing concentrate from Australia, but very much focused on producing lithium chemicals from a portfolio of assets in various different time zones and regions around the world. So very much focused on looking at and we are probably starting -- going to be starting somewhere to evaluate those downstream opportunities quite actively, probably as we kind of close out some of the other strategic transactions that we have currently on hand.

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