Blue Sky, page-3

Cool book Bob. I read that a while back too and found it interesting.
Salar del Hombre Muertos is one of the rock stars of brine areas and one of the first to be mentioned in the book.

Comparisons with Orocobre have plagued Galaxy all year. I take Joe Lowry's analysis of their problems and I won't repeat them again here (for the sake of those here who spread around their li investments). Galaxy's progress with Sal de Vida has key advantages to ORE's slow development.
- they'll be approaching it having already had a background in building the same kind of processing facility at Jiangsu.
- they'll have a good supply of cash coming through from Mt Cattlin
- they'll find it easier to find finance on favourable terms
- they've had the chance to study what has gone so wrong at Olaroz
- Argentina now a much more pro-business and pro-lithium country willing to fast track new operations and have reduced regulations & duties and improved infrastructure (roads,power) in the lithium triangle.

and not least of the advantages - Sal de Vida is a much bigger tenement with better chemistry.
The few impurities the salar has the less costly and time consuming it is to produce battery grade.

This year was Year of Spodumene. New hard rockers hit the stage every month.
Galaxy finally are crossing the tape and well ahead of the pack. The pack will have our problems x10 to contend with - and even worse as things are getting very cut throat back there.
Still focusing on drilling and proving up a resource when its clear the market is in a headlong rush to get production.
The whole life and size of mine argument means nothing if you're going to be late to market and miss valuable income and a chance to get established.
In the north of WA, the privatisation of Utah Point is a big potential stumbling block to some of those company plans. Even if a small miner get's access then they can have their capacity sold to a bigger player if they experience delays ( and which of them is likely not to experience those?). Then there is the litigation and law suits and the problems that many of these plants will have with flotation circuits and nailing down firm Chinese buyers who will happily tear up deals and talk to the next guy when the wind changes.

Next year is the Year of Brine. It is still a bit alien to the Australian investor - who only equates resources with large dump trucks.
If the world is going to get enough lithium and produce it at a long term sustainable price then it has to come from brine.

Anybody still arguing that brine is more expensive than spodumene has way too many hard rocks in their head. Spodumene has too many moving parts to be an efficient operation - mining, crushing, refining the grade, removing impurities, trucking, shipping, trucking, processing.
And many of these with Australian mining wages to be paid.

We are lucky that Galaxy already has their spodumene plant set up to go and will have the costs way down on the next entrants who will enter debt-ridden and inexperienced.

Brine is a 2 step process. Dry and then produce battery grade from the processor.
It's almost entirely dependent on having good chemistry in the deposit and running an efficient chemical processor plant.
Brine costs can be mitigated by potash credits but even without them it is production of battery grade for a little over $3k - which comes in only slightly more than the cost of initial spodumene production (prior to trucking/shipping/trucking/processing). Any way you look at it - it is a process that is half as expensive as producing battery grade from spodumene,
and the brine product can be sold on the market without losing the processors profit margin (at least half).
And the myth about high grade battery spodumene is just that. Our competitors touting a higher grade have already had a visit from Joe Lowry to explain that it is pure BS.
Battery grade is battery grade. Higher content of lithium in hard rock can be handy for ceramics - but we're not entering into a global pot production boom.
(cept in California).

Galaxy's forecast production timeline I think is quite conservative.
Perhaps as a date to have already achieved 25ktpa but the desalination process is only 12-18months so it could conceivably be quite a bit faster.
A test plant sized operation at SDV could produce sellable quantity within 12months
was forecast in one of our broker reports (Canaccord?Hartleys?- can't remember right now). The barrier to entry is the cost of the plant which means that its going to be much harder for other Australian entrants to raise the kind of cash to build a processing facility. That is why it is largely the province of the major companies.

Kudos to Orocobre for getting in and getting going but I think next year we can learn from their mistakes and develop Sal de Vida in a faster and more efficient way, having better access to capital and the benefit of 2 DFS studies to make sure that it has been planned out as carefully as possible. I would hope that the forward plan would be to continue to reinvest in further increasing capacity year on year. A stage 2 plant with 50ktpa production is my dream for SDV. 50kt x 20kUSD/t lithium would be a $1bUSD/year operation.

The last blue sky element for Galaxy would be further acquisitions. With good finance in place and good money coming in there is nothing to stop Galaxy buying a few other operations that are good deals, close to making money or with assets that Galaxy can develop.

We also have James Bay to develop which could mirror Mt Cattlin.
We get the DFS for that next year.
Then other minerals. GMM's Mt Chesterfield gold project.
+ whatever else they may find in the Dowling Pit or in the ice of Quebec.

I'm not sure that its really that relevant to try to put a final price on Galaxy's shares quite yet.
Seems that Galaxy will always lag behind pricing in it's assets, simply because as one comes on line there will be another about to start.

At least for the next few years that would seem to be the pattern that we'll experience.
Where is this company going to be in 5 years with 3 assets running at full potential?