Make of broker notes what you will... but here are a few after the qrtly...
UBS COMMENTARY Ore mined lifted 23% in the September quarter and was ahead of UBS estimates. Feed grade was above reserve grade while recovery was lower at 57%. Concentrate production guidance for the full year has been narrowed to the lower end of previous guidance, to 183-193,000t.A review of Mount Cattlin operations has been announced in the face of ongoing market challenges in the lithium sector. The review will prioritise value over volume. UBS maintains a Neutral rating and $1.20 target.
CS COMMENTARY Outside of the stabilisation and recovery in the lithium price, and improved demand, Credit Suisse believes the Sal de Vida optimisation update is shaping up as the next catalyst.The broker does not expect a buyer or strategic partner will be found in the current climate but does envisage potential for optimisation work to enhance the attractiveness of the asset.Outperform rating maintained. Target is reduced to $1.80 from $2.00.
MS COMMENTARY Production and costs were broadly in line with expectations while processed grades were 7% ahead of Morgan Stanley's estimates. No new pricing points were provided but the company has flagged a weak Chinese market price, with de-stocking continuing.Equal-weight rating retained. Target is $1.20. Industry View: Attractive.
ORDS COMMENTARY Ord Minnett envisages an improved market in the first half of 2020. In the meantime, in order to preserve life and value at the Mount Cattlin operation, the company is reducing mining volumes by -40% and output by -25% in 2020.Ord Minnett expects more supply-side rationalisation. The broker assesses value in the company's assets and has confidence in its ability to negotiate this period of low prices. Accumulate maintained. Target is reduced to $1.60 from $1.80.
CANNACCORD Galaxy Resources plans to cut production in response to weak market conditions, and Canaccord thinks there is more the lithium miner can do to insulate its cash balance against strengthening headwinds. Galaxy yesterday said a review of operations at its Mt Cattlin mine in Australia is likely to conclude that mined material will be cut by around 40% next year. It will use stockpiled ore to keep concentrate output at around 75% of the current rate. Canaccord notes that Galaxy expects cash costs to remain around current levels into 2020. "We highlight that to further preserve cash, Galaxy could look to monetize unsold concentrate inventories, which at current prices would deliver an additional US$25 million in cash flow," the investment bank says. DJ Galaxy Resources Price Target Cut 23% to A$1.50/Share by Canaccord Genuity
MACQ COMMENTARY Galaxy's Sep Q production was solid but shipments fell short despite plenty of inventory. Given global lithium oversupply, Galaxy will now go the way of graphite producer Syrah Resources ((SYR)) and cut back production at Mt Cattlin by -25% until prices improve.The company will now strive for "value over volume" by moving forward with optimisation projects.The cut-back suggests to the broker a weakening market outlook. Underperform retained, target falls to 80c from $1.10.
GXY Price at posting:
83.5¢ Sentiment: Hold Disclosure: Held
