I think a lot of the commentary seems to have missed an...

I think a lot of the commentary seems to have missed an important detail.

Why is Galaxy the only Australian lithium company to do a truly massive impairment write-down?

Anybody?

No. Colin. That wasn’t it.
No. ASB. That’s wrong too, but perhaps if you play with some pictures of the Titanic you can have more fun.

And No, Mr I-Only-Read-One-Line-in-The-Financial-Report, Galaxy didn’t lose $176.8m USD.
This "loss" is an own goal.
They decided it was the right thing to do - to declare a loss based on valuation of assets.

How very reasonable of them.

They just decided to sit down one day and get their accountants, perhaps with a few notes from Director Bacchus, to establish some valuations that reflect this current climate.

I mean, because its just the right thing to do on a rainy day. Isn’t it?
Nothing strange about it.

Oh. While they were at it they probably said things like “that’s a little high, don’t you reckon Friedrich?

Perhaps down a bit more. Mr Bacchus. How is that looking now?”

until they got it down about as low as you could possibly go with a straight face.

Over a few biscuits and some tea, Mt Cattlin and its stockpile got written down $150m USD.

Ouch. Wow.
Now why the hell would you do that?
Nobody else is doing this?

Shouldn’t they all? PLS. AJM etc.

It’s a complete mystery.

Now to something entirely unrelated -if you were a receiver, new to receiving a spodumene concentrator plants, you have a tough job coming up at Bald Hill.

What is it worth? How to work that out?
I know - we’ll compare it Apples vs Apples with another spodumene mine.

Oh. Here is one just down the road. Mt Cattlin. Recently professionally valued.
What is it worth? Perhaps we can use it as a guide to work out a fair value.
Thing is that one is a bit bigger, profitable, optimised, has a fines circuit and mica classifier and the mine has a longer LOM and higher grade.

So. Yeah. That one at Mt Cattlin would be like a fairly much more expensive version of an operation that didn’t have that stuff.
Don’t you think that’s fair, Mr Receiver?

So. What kind of discount are you considering for a "FAIR" value, based on an apples to apples comparison, Mr Receiver?

What about we use the same system to work out how impaired this plant might be, in the current ultra-terrible pricing environment?

And that ladies and gentlemen is how to play the song Good Night Irene at Bald Hill on a rainy night.

Galaxy’s present predicament, a bit better than break even from 50% of H1 shipments (while paying for all the production)

and looking forward to H2 with 50% more shipped than produced is already priced in.
Guidance is to expect an uptick in H2 pricing.

What REALLY hasn’t been priced is the potential sudden arrival of a second plant on Galaxy's door-step
and in a manner that potentially avoids expensive dual on-market take-over.
Even permanent down-rampers of Galaxy have been whistling at the absolute professionalism and speed of Galaxy's move on A40.

All that is left is a simple and fairly administered bid process where the auctioneer works for Galaxy (in an entirely independent way, of course).

Yes. There is still a lot that can happen before this is resolved.
But. Still. You have got to admire the balls and absolute ninja-ness of management.
Do they look the goods to survive tough times, or what?

I’m not trying to be callous or relish in any A40 misfortune here.
I know what losing everything on a play that goes AWOL feels like.
I've said my bit about having a friend who works there too, and I'm very sorry that there is the very real possibility that A40 share holders may not get to recoup on much of their initial investment.

However, the mismanagement of A40 is entirely the work of their management.
They set this up to fall over and it was going to happen one way or the other.
Galaxy participated in a cap raise where the funds were ear-marked for optimisation.
They were used for logos and bonuses instead.
It would be like lending your friend some money to get himself sorted with a place to live, only to find he took it to the casino.
Ok. bad example. I have good friends like that. And I've done it too..
How about.. ah forget it..

But the reality is that Galaxy had every right to stop playing Mr Nice Guy once that happened.

Galaxy has been shafted and mistreated by shorters and funds for years and this period is all about survival, optimisation and growth.
If we are brutal now it is because we have been brutalised.
Share holders here are in no mood for too much gentemanly White Knight stuff.
There is blood everywhere in the lithium sector.

There is only room for so a few players in WA.
Debt is lethal.

Being positioned with the right product and having taken advantage of the discounts at the bottom, prior to the inevitable turn of the lithium demand cycle is vital.

Galaxy would not have taken on A40 without being confident of a turning market, that they can do a good job with refurbing the plant, new offtakes, the converter JV etc and emerge from this period with a much bigger dual mine operation.