Hi @fnbig1, I agree. I'm no trader, purely LT investor. Buy only...

Hi @fnbig1,

I agree. I'm no trader, purely LT investor. Buy only on fundamentals and HOLD, topping up when price is right and only exiting a position when changes to the thesis dictate.

Share price weakness based on market ignorance is actually a fine thing for increasing a holding within portfolio balance limits as far as I'm concerned. That's not to say I'd be upset with the SP increasing, but I'm not that concerned either way. My take on investing is trying to spot opportunity to buy a stake in a company that has the potential to grow from minnow to whale and for me GXY fits the bill.

In this instance some of my reasoning is:

1. The world is transitioning from fossil fuel based energy.

Whether for climate change driven reasons or finite resource reasons is immaterial to the investment case - it's happening... oil, coal and gas have been enormous wealth generators in the past. New energy sources and their supply and distribution chains will be wealth generators in the future.

2. Lithium is one of the most logical replacements.

Relatively abundant in nature, one of the most capable elements for storing energy, already accepted by industry and well understood and applied commercially .

3. The worldwide production of Li chemicals is currently tiny.

The total value of the Li market was only just over US$3B last year, US$1B two years prior to that.

4. Growth drivers are huge.

Li battery demand driven by EV and ESS is forecast to quadruple in volume from 2017 to 2025. Government mandates and incentives in emerging and mature markets (with notable exceptions like Australia) are helping to drive this, China's fully controlled economy and market in particular.

5. Relatively few established producers.

Four producers - ALB, SQM, Tianqi and Ganfeng produce more than ¾ of the world's supply currently. Whilst there are many companies racing to enter the fray, Galaxy is already in the top five pure play Li producers. This is a huge advantage in the lithium space, as there is a huge gap between having a resource and generating Li chemicals. Financing and expertise and experience are incredibly difficult to come by.

6. Great balance sheet.

Debt free, liquidity bordering on riskily high, quality assets
Mt Cattlin producing and an income stream for growth, future development of SDV virtually assured and James Bay process commenced. Assets are geographically disparate and of high quality.

7. Strong and capable management with a plan, focus and passion.

Evidenced by bringing a near bankrupt company back to be debt free, strategically and carefully shepherding quality assets towards operation without having to take on debt.


Whilst I entered on this stock a while back, it is still presenting as a "minnow" price - yet it's growth has moved inexorably on towards becoming a "whale". I believe the reason for this is market ignorance, something I actually delight in as it presents opportunity.

Analysts and brokers covering this and other Lithium sector companies (and a fairly large percentage of investors as well) in general have a very limited understanding of the nature of the product and its market. Lithium is consigned to the mining/materials sector, and the coverage is carried out by mining and materials analysts.

They find it difficult to conceive of a material that needs to be produced in different ways for different customers, is varied not so much in quality but in characteristics, has a very limited shelf life, requires commitment from both producer and customer to generate and utilise a product that maintains its profile. It is not even easy to measure output. The commonly misapplied term LCE (Lithium Carbonate Equivalent) is often used as a means to equate production and demand between companies or as a measure of relative resource strength. It's still more indicative than a real measure. A material that has no marketplace, for which a spot or daily price has no relevance. It is outside their understanding.

Yet viewed from other business perspectives, it makes sense and can be read. It is just new.
Contracts are entered into which have a value, supply and demand is a factor but reliability and capability are drivers of price. Whilst parties are reluctant to reveal full details, sufficient information is available to derive a determination about the operation from corporate reporting and announcements.

In time, perhaps price reporting agencies (PRA's) such as Benchmark Minerals Intelligence will develop or morph into something closer to an index or market that can track more closely relative price movements over shorter time frames, but I personally believe it is unlikely to ever fit the mold that materials analysts would like.
(see this link)

http://www.benchmarkminerals.com/li...he-rush-to-join-the-lithium-pricing-industry/

In the interim overall sharemarket ignorance is keeping share prices depressed and subject to volatility. Personally, I just see this as opportunity.

If one believes in the strength and future growth prospects of the new energy sector and the strength, vision and strategy of a company participating in that sector then purchasing a piece of the company is a no-brainer.

Money talks, and in time, when the dollars roll in and significant dividends are paid to the owners (shareholders) of the company on a regular basis the share price will take care of itself.

As a holder with no plan to sell I'm not much concerned.



(This is purely my opinion, not offered or to be taken as financial advice)